INVESTORS' AGREEMENT
dated
as of
January 21, 1998
among
XXXXXX SCIENTIFIC INTERNATIONAL, INC.,
XXXXXX X. XXX EQUITY FUND III, L.P.,
THL-CCI LIMITED PARTNERSHIP,
THL FOREIGN FUND III, L.P.,
THL FSI EQUITY INVESTORS, L.P.,
DLJ MERCHANT BANKING PARTNERS II, L.P.,
DLJ MERCHANT BANKING PARTNERS II - A, L.P.,
DLJ OFFSHORE PARTNERS II, X.X.,
XXX XXXXXXXXXXX XXXXXXXX, X.X.,
XXX DIVERSIFIED PARTNERS - A, L.P.,
DLJ MILLENNIUM PARTNERS, L.P.
DLJ MILLENNIUM PARTNERS - A, L.P.,
DLJMB FUNDING II, INC.,
UK INVESTMENT PLAN 1997 PARTNERS,
DLJ EAB PARTNERS, X.X.,
XXX XXX XX, X.X.,
XXX FIRST ESC, L.P.,
CHASE EQUITY ASSOCIATES, L.P.,
XXXXXXX XXXXX KECALP L.P. 1997,
KECALP INC.,
ML IBK POSITIONS, INC.
AND
CERTAIN OTHER PERSONS NAMED HEREIN
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
DEFINITIONS............................................................ 2
Section 1.1 Definitions............................................... 2
ARTICLE II
CORPORATE GOVERNANCE AND MANAGEMENT.................................... 13
Section 2.1 Composition of the Board.................................. 13
Section 2.2 Removal................................................... 13
Section 2.3 Vacancies................................................. 14
Section 2.4 Action by the Board....................................... 14
Section 2.5 Conflicting Charter or Bylaw Provision.................... 15
ARTICLE III
RESTRICTIONS ON TRANSFER............................................... 15
Section 3.1 General................................................... 15
Section 3.2 Legends................................................... 16
Section 3.3 Permitted Transferees; Transfers by THL Entities.......... 16
Section 3.4 Restrictions on Transfers by Institutional Shareholders... 17
Section 3.5 Restrictions on Transfers by Management Shareholders...... 18
Section 3.6 Company Right of First Refusal............................ 19
Section 3.7 Notifications Regarding Transfers......................... 20
ARTICLE IV
TAG-ALONG RIGHTS; DRAG-ALONG RIGHTS; PREEMPTIVE RIGHTS................. 20
Section 4.1 Rights to Participate in Transfer......................... 20
Section 4.2 Right to Compel Participation in Certain Transfers........ 23
Section 4.3 Preemptive Rights......................................... 26
Section 4.4. Certain Other Purchases of Equity Securities.............. 29
ARTICLE V
REGISTRATION RIGHTS.................................................... 30
Section 5.1 Demand Registration....................................... 30
Section 5.2 Piggyback Registration.................................... 34
Section 5.3 Holdback Agreements....................................... 35
Section 5.4 Registration Procedures................................... 36
Section 5.5 Indemnification by the Company............................ 40
Section 5.6 Indemnification by Participating Shareholders............. 41
Section 5.7 Conduct of Indemnification Proceedings.................... 43
Section 5.8 Contribution.............................................. 44
Section 5.9 Participation in Public Offering.......................... 46
Section 5.10 Cooperation by the Company................................ 46
Section 5.11 No Transfer of Registration Rights........................ 46
ARTICLE VI
CERTAIN COVENANTS AND AGREEMENTS....................................... 46
Section 6.1 Confidentiality........................................... 46
Section 6.2 Reports................................................... 48
Section 6.3 Limitations on Subsequent Registration.................... 48
Section 6.4 Limitation on Purchase of Equity Securities............... 49
ARTICLE VII
MISCELLANEOUS.......................................................... 51
Section 7.1 Entire Agreement.......................................... 51
Section 7.2 Binding Effect; Benefit................................... 51
Section 7.3 Assignability............................................. 51
Section 7.4 Amendment; Waiver; Termination............................ 51
Section 7.5 Notices................................................... 52
Section 7.6 Headings.................................................. 55
Section 7.7 Counterparts.............................................. 55
Section 7.8 Applicable Law............................................ 55
Section 7.9 Specific Performance...................................... 55
Section 7.10 Consent to Jurisdiction; Expenses......................... 55
Section 7.11 Representative............................................ 56
Section 7.12 Severability.............................................. 59
INVESTORS' AGREEMENT
AGREEMENT dated as of January 21, 1998 among (i) Xxxxxx
Scientific International, Inc. (the "Company"), (ii) Xxxxxx X. Xxx Equity Fund
III, L.P. ("THL"), certain individuals associated with THL listed on Schedule
I attached hereto, THL-CCI Limited Partnership ("THL-CCI"), THL Foreign Fund
III, L.P. and THL FSI Equity Investors, L.P. ("THL/FSI" and collectively with
THL, the individuals listed on Schedule I, THL-CCI, and THL Foreign Fund III,
L.P., the "THL Entities"), (iii) DLJ Merchant Banking Partners II, L.P.
("DLJMB"), DLJ Offshore Partners II, C.V., DLJ Diversified Partners, L.P.,
DLJMB Funding II, Inc., DLJ Merchant Banking Partners II - A, L.P., DLJ
Diversified Partners - A, L.P., DLJ Millennium Partners, L.P., DLJ Millennium
Partners - A, L.P., UK Investment Plan 1997 Partners, DLJ EAB Partners, L.P.,
DLJ ESC II, L.P., and DLJ First ESC, L.P. (collectively the "DLJ Entities"),
(iv) Chase Equity Associates, L.P. ("Chase Equity"), (v) Xxxxxxx Xxxxx KECALP
L.P. 1997, KECALP INC., and ML IBK Positions, Inc., (collectively, the
"Xxxxxxx Xxxxx Entities" and, together with each other entity listed in
clauses (iii) and (iv), the "Institutional Shareholders" and, collectively
with (ii), the "Equity Investors") and (vi) certain other Persons listed on
the signature pages hereof (including the trust pursuant to the Trust
Agreement, dated of even date herewith, between the Company and Mellon Bank,
N.A., as trustee (the "Rabbi Trust")) (the "Management Shareholders" and
individually, along with the THL Entities, DLJ Entities, Chase Equity, and
Xxxxxxx Xxxxx Entities, each a "Shareholder") and such other parties who may
become parties of this Agreement pursuant to the terms hereof.
W I T N E S S E T H :
WHEREAS, pursuant to the Subscription Agreement (as defined
below) the Equity Investors are or will be acquiring securities of FSI Merger
Corp. ("FSI"); and
WHEREAS, pursuant to the terms of the Merger Agreement (as
defined below), FSI will be merged with and into the Company, with the Company
as the surviving corporation (the "Merger"); and
WHEREAS, pursuant to the Merger, the stock of FSI held by
the Equity Investors will be converted into stock of the Company; and
WHEREAS, pursuant to the Merger, the Management Shareholders
are entitled to retain shares of stock of the Company; and
WHEREAS, upon the Merger and pursuant to the Equity
Investors' commitment to purchase cumulative preferred stock of the Company,
warrants to purchase common stock of the Company will be issued to the Equity
Investors; and
WHEREAS, pursuant to the Rabbi Trust and any stock or option
plan, Management Shareholders are or will hold shares of stock of the Company;
and
WHEREAS, the parties hereto may obtain additional shares of
stock of the Company in the future; and
WHEREAS, the parties hereto desire to enter into this
Agreement to govern certain of their rights, duties and obligations after
consummation of the Merger;
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. (a) The following terms, as used
herein, have the following meanings:
"Adverse Person" means any Person whom the Board reasonably
determines is a competitor or a potential competitor of the Company or its
Subsidiaries.
"Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under common
control with such Person, provided that no securityholder of the Company shall
be deemed an Affiliate of any other securityholder solely by reason of any
investment in the Company. For the purpose of this definition, the term
"control" (including with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or by contract or otherwise.
"Applicable Law," with respect to any Person, means all
provisions of all laws, statutes, ordinances, rules, regulations, permits,
certificates or orders of any Governmental Authority applicable to such Person
or any of its assets or property or to which such Person or any of its assets
or property is subject, and all judgments, injunctions, orders and decrees of
all courts and arbitrators in proceedings or actions in which such Person is a
party or by which it or any of its assets of properties is or may be bound or
subject.
"beneficially own" shall have the meaning set forth in Rule
13d-3 of the Exchange Act.
"Board" means the board of directors of the Company.
"Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are authorized by law to
close.
"Closing Date" means January 21, 1998.
"Common Stock" shall mean the common stock, par value $.01
per share, of the Company, non-voting common stock, par value $.01 per share,
of the Company and any stock into which such common stock and non-voting common
stock may thereafter be converted or changed.
"Demand Registration" means collectively, a THL Demand
Registration, an Institutional Shareholder Demand Registration, or a
Management Shareholder Demand Registration.
"Derivatives" shall mean options, warrants (including the
Equity Warrants) or other rights to acquire any Equity Securities of the
Company.
"Equity Investors" means the Institutional Shareholders and
the THL Entities.
"Equity Securities" means the Common Stock and preferred
stock, securities convertible into or exchangeable for Common Stock or
preferred stock, Derivatives, and any other equity security issued by the
Company.
"Equity Warrants" means warrants to purchase Common Stock
pursuant to the Equity Warrant Acquisition Agreement.
"Equity Warrant Acquisition Agreement" means the Common
Stock Warrant Acquisition Agreement, of even date herewith, among the Company,
the Institutional Shareholders and the THL Entities.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Federal Reserve Board" means The Board of Governors of the
United States Federal Reserve System.
"Fully Diluted" means, with respect to any class of Equity
Securities, all outstanding shares of such class and all shares issuable in
respect of securities convertible into or exchangeable for such class, stock
appreciation rights or options, warrants and other irrevocable rights to
purchase or subscribe for such class or securities convertible into or
exchangeable for such class; provided, that no Person shall be deemed to own
such number of Fully Diluted shares of such class as such Person has the right
to acquire from any Person other than the Company.
"Initial Ownership" means, with respect to any class of
Equity Securities, the number of shares of such class of Equity Securities
beneficially owned and (without duplication) which such Persons have the right
to acquire from any Person as of the date hereof, or in the case of any Person
that shall become a party to this Agreement on a later date, as of such date,
taking into account any stock split, stock dividend, reverse stock split or
similar event.
"Initial Public Offering" means the first sale after the
date hereof of Common Stock pursuant to an effective registration statement
under the Securities Act (other than a registration statement on Form S-8 or
any successor form).
"Merger Agreement" means the Second Amended and Restated
Agreement and Plan of Merger, as amended, dated as of November 14, 1997, by
and between the Company and FSI.
"New Common Securities" means the Common Stock, whether now
authorized or not, any rights, options or warrants to purchase Common Stock
and any indebtedness or stock of the Company which is convertible into Common
Stock (or which is convertible into a security which is, in turn, convertible
into Common Stock) issued after the date hereof; provided, that the term "New
Common Securities" does not include (i) such Equity Securities issued as a
stock dividend to all holders of Common Stock pro rata or upon any subdivision
or combination of shares of Common Stock; (ii) shares of Common Stock issued
upon exercise of Derivatives outstanding on the date hereof; and (iii) shares
of Common Stock issued to Xxxxxxx X. Xxxxxxx (or entities designated by Xx.
Xxxxxxx who become upon such issuance a party to this Agreement in accordance
with Section 7.3(a) and (b)) in exchange for up to $7,500,000 in cash.
"New Preferred Securities" means any preferred stock,
whether now authorized or not, any rights, options or warrants to purchase
preferred stock and any indebtedness or stock of the Company which is
convertible into preferred stock (or which is convertible into a security
which is, in turn, convertible into preferred stock) issued after the date
hereof; provided, that the term "New Preferred Securities" does not include
such Equity Securities issued as a stock dividend to all holders of preferred
stock pro rata or upon any subdivision or combination of shares of preferred
stock and (ii) shares of preferred stock issued upon exercise of Derivatives
outstanding on the date hereof.
"Non-THL Shareholders" means all Shareholders other than the
THL Entities.
"Percentage Ownership" means, with respect to any
Shareholder at any time, (i) the number of Fully Diluted shares of Common
Stock that such Shareholder beneficially owns (and, without duplication, has
the right to acquire from any Person) at such time, divided by (ii) the total
number of Fully Diluted shares of Common Stock at such time.
"Permitted Transferee" means (i) in the case of
Institutional Shareholders (A) the Company, (B) any THL Entity, (C) any
general or limited partner or shareholder of such Shareholder, and any
corporation, partnership or other entity that is an Affiliate of such
Shareholder (collectively, "Shareholder Affiliates"), (D) any general partner,
limited partner, employee, officer or director of such Shareholder or a
Shareholder Affiliate, or any spouse, lineal descendant (whether natural or
adopted), sibling, parent, heir, executor, administrator, testamentary
trustee, lifetime trustee, legatee or beneficiary of any of the foregoing
persons described in this clause (d) (collectively, "Shareholder Associates"),
and (E) any trust, the beneficiaries of which, or any corporation, limited
liability company or partnership, stockholders, members or general or limited
partners of which include only such Shareholder, such Shareholder Affiliates or
Shareholder Associates; provided, however, that in order for any of the
parties identified in clauses (C), (D) or (E) to be a Permitted Transferee in
connection with a Transfer (or series of related Transfers) in excess of 2.5%
of such Institutional Shareholder's Initial Ownership of the class of Equity
Securities to be transferred, such party must be acceptable to THL, which
acceptance may not be unreasonably withheld and which acceptance shall not be
required for the Transfer by KECALP Inc. of all of its Equity Securities to
Xxxxxxx Xxxxx KECALP International L.P. 1997, a Cayman Islands limited
partnership; provided, further, however, that the foregoing proviso shall not
be applicable if the number of Shares of a class of Equity Securities to be
Transferred by an Institutional Shareholder pursuant to clause (C), (D) or
(E), together with all other Transfers of such class of Equity Securities by
such Institutional Shareholder and its Permitted Transferees pursuant to any
of such clauses, is less than (I) the aggregate number of Shares of such class
of Equity Securities Transferred by the THL Entities and their THL Designated
Transferees in accordance with clause (A) or (B) of the definition of "THL
Designated Transferees" multiplied by (II) such Institutional Shareholders'
Initial Proportionate Equity Interest of such class, treating for purposes of
this proviso the Equity Warrants as part of the class of Common Stock, or
(ii) in the case of a Management Shareholder (A) the
Company, (B) any THL Entity, (C) a spouse or lineal descendant (whether
natural or adopted), sibling, parent, heir, executor, administrator,
testamentary trustee, lifetime trustee, legatee or beneficiary of any of such
Management Shareholder, (D) any trust, the beneficiaries of which, or any
corporation, limited liability company or partnership, stockholders, members
or general or limited partners of which include only the Persons named in
clause (B) or (C), (E) bona fide financial institutions, to the extent that
such transfer is in connection with a pledge in connection with a borrowing
arrangement unrelated to a constructive or synthetic sale, such as any hedge,
sale or purchase of any derivative security or other action (other than
Transfers expressly permitted by the terms hereof) having the effect of
reducing a Management Shareholder's economic interest in Equity Securities or
reducing a Management Shareholder's exposure to a decrease in fair market value
of Equity Securities, or other similar transaction involving such Management
Shareholder's Equity Securities, or (F) a charitable institution as defined in
Section 501(c) of the Internal Revenue Code of 1986, as amended, which
receives a bona fide gift of Shares, which when aggregated with all other
Transfers of Shares of such class of Equity Securities by such Management
Shareholder and its Permitted Transferees pursuant to this clause (F) does not
exceed 10% of such Management Shareholders' Initial Ownership of such class of
Equity Securities.
"Person" means an individual, corporation, limited liability
company, partnership, association, trust or other entity or organization,
including a government or political subdivision or an agency or
instrumentality thereof.
"Primary Executives" means the following Management
Shareholders: Xxxx X. Xxxxxxxx and Xxxx X. Xxxxxxx.
"Public Offering" means any primary or secondary public
offering of shares of Common Stock pursuant to an effective registration
statement under the Securities Act other than pursuant to a registration
statement filed in connection with a transaction of the type described in Rule
145 of the Securities Act or for the purpose of issuing securities pursuant to
an employee benefit plan.
"Qualifying Public Offering" means a Public Offering
yielding aggregate gross proceeds of at least $50,000,000.
"Registrable Securities" means at any time, with respect to
any Shareholder or its Permitted Transferees, any shares of Common Stock then
owned by such Shareholder or its Permitted Transferees until (i) a
registration statement covering such securities has been declared effective by
the SEC and such securities have been disposed of pursuant to such effective
registration statement, (ii) such securities are sold under circumstances in
which all of the applicable conditions of Rule 144 (or any similar provisions
then in force) under the Securities Act are met or (iii) such securities are
otherwise Transferred, the Company has delivered a new certificate or other
evidence of ownership for such securities not bearing the legend required
pursuant to this Agreement and such securities may be resold without
subsequent registration under the Securities Act.
"Registration Expenses" means (i) all registration and
filing fees, (ii) fees and expenses of compliance with securities or blue sky
laws (including reasonable fees and disbursements of counsel in connection with
blue sky qualifications of the securities registered), (iii) printing
expenses, (iv) internal expenses of the Company (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), (v) reasonable fees and disbursements of counsel
for the Company and customary fees and expenses for independent certified
public accountants retained by the Company (including expenses relating to any
comfort letters or costs associated with the delivery by independent certified
public accountants of a comfort letter or comfort letters requested pursuant
to Section 5.4(h) hereof), (vi) the reasonable fees and expenses of any
special experts retained by the Company in connection with such registration,
(vii) reasonable fees and expenses of up to one counsel for the Shareholders
participating in the offering, (viii) fees and expenses in connection with any
review of underwriting arrangements by the National Association of Securities
Dealers, Inc. (the "NASD") including fees and expenses of any "qualified
independent underwriter" and (ix) fees and disbursements of underwriters
customarily paid by issuers or sellers of securities, but shall not include
any underwriting fees, discounts, commissions or transfer taxes attributable to
the sale of Registrable Securities, or any out-of-pocket expenses (except as
set forth in clause (vii) above) of the Shareholders or any fees and expenses
of underwriter's counsel.
"Regulated Stockholder" shall mean Chase Equity Associates,
L.P. and any other Stockholder (i) that is subject to the provisions of
Regulation Y or Regulation K of the Federal Reserve Board, 12 C.F.R. Part 225
(or any successor to such Regulations) and (ii) that holds Equity Securities
of the Company and (iii) that has provided written notice to the Company of
its status as a "Regulated Stockholder" hereunder.
"Regulatory Problem" means any set of facts or circumstance
wherein it has been asserted by any governmental regulatory agency (or a
Regulated Stockholder reasonably believes that there is a risk of such
assertion) that such Regulated Stockholder is not entitled to acquire, own,
hold or control, or exercise any significant right (including the right to
vote) with respect to, any Equity Securities of the Company or any subsidiary
of the Company.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as
amended.
"Shareholder" means each Person (other than the Company but
including the Equity Investors and the Management Shareholders) who are or
shall become a party to this Agreement, whether in connection with the
execution and delivery hereof as of the date hereof, pursuant to Section 7.3
or otherwise, so long as such Person shall beneficially own any Equity
Securities.
"Shares" means shares of Common Stock and other Equity
Securities held by the Shareholders on the date hereof or acquired hereafter,
but excluding any Derivatives.
"Subscription Agreement" means each Subscription Agreement
of even date herewith between FSI and each of the Equity Investors.
"Subsidiary" means, with respect to any Person, any entity
of which securities or other ownership interests having ordinary voting power
to elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by such Person.
"THL Designated Transferee" means (A) any general or limited
partner of the THL Entities (a "THL Partner"), and any corporation,
partnership, or other entity which is an Affiliate of the THL Entities or any
THL Partner (collectively, the "THL Affiliates"), (B) any managing director,
general partner, director, limited partner, officer or employee of the THL
Entities or a THL Affiliate, or the heirs, executors, administrators,
testamentary trustees, lifetime trustees, legatees or beneficiaries of any of
the foregoing Persons referred to in this clause (B) (collectively, "THL
Associates"), (C) a charitable institution as defined in Section 501(c) of the
Internal Revenue Code of 1986, as amended, which receives a bona fide gift by
a THL Individual of Shares (D) a bank, financial institution or other lender
which receives a bona fide pledge by a THL Individual of Shares, and (E) any
trust, the beneficiaries of which, or any corporation, limited liability
company or partnership, the stockholders, members or general or limited
partners of which include only the THL Entities, THL Affiliates, THL
Associates, their spouses or their lineal descendants. The term "THL
Entities," to the extent the THL Entities shall have Transferred any of its
Shares to "THL Designated Transferees," shall mean the THL Entities and the
THL Designated Transferees of the THL Entities, taken together, and any right
or action that may be exercised or taken at the election of the THL Entities
may be exercised or taken at the election of the THL Entities and such THL
Designated Transferees, unless otherwise restricted by the THL Entity engaging
in such a transfer.
"THL Individuals" means the Persons listed on Schedule I and
Schedule II.
"Underwritten Public Offering" means a firmly underwritten
public offering of Registrable Securities of the Company pursuant to an
effective registration statement under the Securities Act.
(b) Each of the following terms is defined in the Section
set forth opposite such term:
Term Section
---- -------
Cause 2.2
Confidential Information 6.1(b)
DLJ Entities Representative 7.11(b)
Drag-Along Notice 4.2(b)
Drag-Along Notice Period 4.2(b)
Drag-Along Portion 4.2(a)
Drag-Along Rights 4.2(a)
Drag-Along Sale 4.2(a)
Drag-Along Sale Price(s) 4.2(b)
ethical wall 6.1(a)
Holders 5.1(b)
Indemnified Party 5.7
Indemnifying Party 5.7
Initial Proportionate
Equity Interest 3.4
Inspectors 5.4(g)
Institutional Shareholder
Demand Registration 5.1(g)
Management Representative 7.11(d)
Management Transfer 3.5(a)
Maximum Offering Size 5.1(e)
Xxxxxxx Xxxxx Entities
Representative 7.11(c)
New Securities 4.3(a)
Nominee 2.3(a)
Offer Price 3.6(a)
Offered Shares 3.6(a)
Offeror 3.6(a)
Option Period 3.6(a)
Piggyback Registration 5.2(a)
Preemptive Rights Notice 4.3(a)
Preemptive Rights Portion 4.3(a)
Primary Executive Demand
Registration 5.1(h)
Records 5.4(g)
Representatives 6.1(b)
Shareholder 7.3(a)
Tag-Along Notice 4.1(b)
Tag-Along Notice Period 4.1(b)
Tag-Along Offer 4.1(b)
Tag-Along Person 4.1(a)
Tag-Along Portion 4.1(b)
Tag-Along Response Notice 4.1(b)
Tag-Along Right 4.1(b)
Tag-Along Sale 4.1(a)
Tag-Along Shareholder 4.1(a)
Third Party Purchase Notice 4.4
Third Party Purchase Portion 4.4
THL Demand Registration 5.1(a)
THL Entities Representative 7.11(a)
THL Entity Shareholder 7.3(d)
Threshold Percentage 4.1(a)
Transfer 3.1(a)
Transfer Notice 3.6(a)
Trigger Date 6.4
ARTICLE II
CORPORATE GOVERNANCE AND MANAGEMENT
Section 2.1 Composition of the Board. The Board shall
consist of at least 10, but no more than 11, members (two of which shall be
individuals which are not "Affiliates" or "Associates" (as those terms are used
within the meaning of Rule 12b-2 of the General Rules and Regulations under
the Exchange Act) of any Shareholder or its Affiliates), of whom seven shall
be nominated by THL, one shall be nominated by DLJMB, one shall be Xxxx X.
Xxxxxxxx and one shall be Xxxx X. Xxxxxxx. Each Shareholder entitled to vote
for the election of directors to the Board agrees that it will vote its shares
of Common Stock or execute consents, as the case may be, and take all other
necessary action (including causing the Company to call a special meeting of
shareholders) in order to ensure that the composition of the Board is as set
forth in this Section 2.1; provided that, no Shareholder shall be required to
vote for another Shareholder's nominee or Xx. Xxxxxxxx or Xx. Xxxxxxx if the
number of shares of Common Stock held by (i) Xx. Xxxxxxxx and Xx. Xxxxxxx
collectively, or (ii) such other Shareholder making the nomination
collectively with its Affiliates, as applicable, is, at the close of business
on the day preceding such vote or execution of consents, less than 10% of such
party's or parties' Initial Ownership of shares of Common Stock on a Fully
Diluted basis; and, provided further, that for so long as Messrs. Xxxxxxxx and
Xxxxxxx collectively own 10% or more of their collective Initial Ownership of
shares of Common Stock on a Fully Diluted basis, designees nominated by THL
and the Equity Investors shall be selected in good faith after consultation
with Messrs. Xxxxxxxx and Xxxxxxx, which consultation shall involve a
consideration of Messrs. Xxxxxxxx and Xxxxxxx'x views relating to the Company.
The initial Board shall consist of the individuals listed on Schedule III
hereto.
Section 2.2 Removal. Each Shareholder agrees that if, at
any time, it is then entitled to vote for the removal of directors of the
Company, it will not vote any of its shares of Common Stock in favor of the
removal of any director who shall have been designated or nominated pursuant
to Section 2.1 unless such removal shall be for Cause or such director or the
Person(s) entitled to designate or nominate such director shall have consented
to such removal in writing, provided that if the Persons entitled to designate
or nominate any director pursuant to Section 2.1 shall request the removal,
with or without Cause, of such director in writing, such Shareholder shall
vote its shares of Common Stock in favor of such removal. Removal for "Cause"
shall mean removal of a director because of such director's (a) willful and
continued failure substantially to perform his duties with the Company in his
established position, (b) willful conduct which is injurious to the Company or
any of its Subsidiaries, monetarily or otherwise, or (c) conviction for, or
guilty plea to, a felony or a crime involving moral turpitude.
Section 2.3 Vacancies. If, as a result of death,
disability, retirement, resignation, removal (with or without Cause) or
otherwise, there shall exist or occur any vacancy on the Board:
(a) the Shareholder(s) entitled under Section 2.1 to
nominate such director whose death, disability, retirement,
resignation or removal resulted in such vacancy, may, subject to
the provisions of Section 2.1, nominate another individual (the
"Nominee") to fill such vacancy and serve as a director of the
Company;
(b) subject to Section 2.1, each Shareholder then entitled
to vote for the election of the Nominee as a director of the
Company agrees that it will vote its shares of Common Stock, or
execute a written consent, as the case may be, in order to ensure
that the Nominee be elected to the Board; and
(c) in the case of removal of either of the Primary
Executives from the Board, the other Primary Executive, if he is
still a member of the Board, shall be entitled to nominate an
individual to fill the resulting vacancy, and the provisions of
Section 2.3(b) shall apply to the election of such nominee.
Section 2.4 Action by the Board. (a) A quorum of the
Board shall consist initially of three directors; provided that THL shall have
the right, subject to applicable law or regulation, in its sole discretion,
until such time as THL owns less than 25% of its Initial Ownership of shares
of Common Stock, to increase or decrease the number of directors necessary to
constitute a quorum.
(b) All actions of the Board shall require the
affirmative vote of at least a majority of the directors at a duly convened
meeting of the Board at which a quorum is present or the unanimous written
consent of the Board; provided that, in the event there is a vacancy on the
Board and an individual has been nominated to fill such vacancy, the first
order of business shall be to fill such vacancy.
Section 2.5 Conflicting Charter or Bylaw Provision. Each
Shareholder shall vote its shares of Common Stock, and shall take all other
actions reasonably necessary, to ensure that the Company's certificate of
incorporation and bylaws (copies of which are attached hereto as Exhibits A
and B) facilitate and do not at any time conflict with any provision of this
Agreement.
ARTICLE III
RESTRICTIONS ON TRANSFER
Section 3.1 General. (a) Each Equity Investor understands
and agrees that the shares of Common Stock purchased pursuant to the
Subscription Agreement and the Equity Warrants received pursuant to the Equity
Warrant Acquisition Agreement have not been registered under the Securities
Act and are restricted securities. Each Shareholder agrees that it will not,
directly or indirectly, sell, assign, transfer, grant a participation in,
pledge or otherwise dispose of ("Transfer") any Shares or Equity Warrants (or
solicit any offers to buy or otherwise acquire, or take a pledge of any Shares
or Equity Warrants) except in compliance with the Securities Act and the terms
and conditions of this Agreement.
(b) Any attempt by any Shareholder to Transfer any
Shares or Equity Warrants not in compliance with this Agreement shall be null
and void and the Company shall not, and shall cause any transfer agent not to,
give any effect in the Company's stock records to such attempted Transfer.
(c) Notwithstanding anything herein to the contrary,
except as may be otherwise set forth in the applicable instrument, Derivatives
(other than the Equity Warrants) shall be transferable only by will, law of
descent or distribution or pursuant to Section 4.2 hereof.
Section 3.2 Legends. (a) In addition to any other legend
that may be required, each certificate for Shares that is issued to any
Shareholder shall bear a legend in substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED
OR SOLD EXCEPT IN COMPLIANCE THEREWITH. THIS SECURITY IS ALSO SUBJECT TO
ADDITIONAL LIMITATIONS OR RESTRICTIONS ON TRANSFER AS SET FORTH IN THE
INVESTORS' AGREEMENT DATED AS OF JANUARY 21, 1998, COPIES OF WHICH MAY BE
OBTAINED UPON REQUEST FROM XXXXXX SCIENTIFIC INTERNATIONAL INC. OR ANY
SUCCESSOR THERETO."
(b) If any Shares shall cease to be Registrable
Securities under clause (i) or clause (ii) of the definition thereof, the
Company shall, upon the written request of the holder thereof, issue to such
holder a new certificate evidencing such Shares without the first sentence of
the legend required by Section 3.2(a) endorsed thereon. If any Shares cease
to be subject to any and all limitations or restrictions on Transfer set forth
in this Agreement, the Company shall, upon the written request of the holder
thereof, issue to such holder a new certificate evidencing such Shares without
the second sentence of the legend required by Section 3.2(a) endorsed thereon.
Section 3.3 Permitted Transferees; Transfers by THL
Entities. Notwithstanding anything in this Agreement to the contrary, (a) any
Non-THL Shareholder may at any time Transfer any or all of its Shares or Equity
Warrants to one or more of its Permitted Transferees so long as (i) such
Permitted Transferee shall have agreed in writing to be bound by the terms of
this Agreement pursuant to Section 7.3 and (ii) the Transfer to such Permitted
Transferee is not in violation of applicable federal or state securities laws
and (b) any THL Entity may at any time Transfer any or all of its Shares or
Equity Warrants to any third party (including THL Designated Transferees) so
long as (i) the Transfer is in compliance with Section 4.1 hereof, (ii) if the
transferee is to be treated as a THL Designated Transferee, such transferee
shall have agreed in writing to be bound by the terms of this Agreement
pursuant to Section 7.3 and (iii) the Transfer is not in violation of
applicable federal or state securities laws.
Section 3.4 Restrictions on Transfers by Institutional
Shareholders. Except as provided in Section 3.3, each Institutional
Shareholder and each Permitted Transferee of such Institutional Shareholder may
Transfer its Shares and Equity Warrants only as follows:
(i) in a Transfer made in compliance with Section 4.1
or 4.2;
(ii) in a Public Offering in connection with the
exercise of its rights under Article 5 hereof;
(iii) following the earlier to occur of (A) the date
on which the Percentage Ownership of such Institutional
Shareholder and its Permitted Transferees is less than 25% of its
Initial Ownership of shares of Common Stock and (B) the seventh
anniversary of the Closing Date, to any Person other than any
Adverse Person; or
(iv) in a Transfer made after an Initial Public
Offering in compliance with Rule 144 under the Securities Act;
provided, however, notwithstanding the foregoing, the
Institutional Shareholder may not Transfer an aggregate number of
Shares of such class of Equity Securities that, together with all
prior Transfers of such class by such Institutional Shareholder
and its Permitted Transferees pursuant to one or more Rule 144
Transfers, represents more than (A) the aggregate number of Shares
of such class Transferred by the THL Entities and their THL
Designated Transferees (other than, in either case, to THL
Designated Transferees) multiplied by (B) such Institutional
Shareholders' Initial Proportionate Equity Interest of such class;
provided, further, that, for purposes of this subsection (iv), the
Equity Warrants shall be treated as part of the class of shares of
Common Stock and the calculations described herein shall include
the number of shares of Common Stock issuable upon exercise of
such Equity Warrants. The "Initial Proportionate Equity Interest"
of a party is such party's Initial Ownership of such class divided
by the Initial Ownership of THL of such class.
Section 3.5 Restrictions on Transfers by Management
Shareholders. (a) Except as provided in Section 3.3, each Management
Shareholder and each Permitted Transferee of such Management Shareholder may
Transfer its Shares only as follows or as set forth in Section 3.5(b):
(i) in a Transfer made in compliance with Section 4.1
or 4.2;
(ii) in a Public Offering in connection with the
exercise of its rights under Article 5 hereof;
(iii) in a Transfer made after an Initial Public
Offering in compliance with Rule 144 under the Securities Act;
provided, however, notwithstanding the foregoing, the Management
Shareholder may not Transfer an aggregate number of Shares of any
class of Equity Securities that, together with all prior Transfers
of such class by such Management Shareholder and its Permitted
Transferees pursuant to one or more Rule 144 Transfers, represents
more than (A) the aggregate number of Shares of such class
Transferred by the THL Entities and their THL Designated
Transferees (other than, in either case, to THL Designated
Transferees) multiplied by (B) such Management Shareholders'
Initial Proportionate Equity Interest of such class;
(iv) following the tenth anniversary of the Closing
Date to any Third Party other than an Adverse Person; or
(v) subject to Section 3.6, a Transfer by a Management
Shareholder to another Management Shareholder (a "Management
Transfer").
(b) Each Management Shareholder and each Permitted
Transferee of such Management Shareholder may Transfer its Shares to any
Person other than an Adverse Person upon the occurrence of a Qualifying Public
Offering.
Section 3.6 Company Right of First Refusal. (a) If a
Management Shareholder (an "Offeror") desires to Transfer Shares to another
Management Shareholder pursuant to the provisions of Section 3.5(a)(v):
(i) such Offeror shall give notice of such offer (the
"Transfer Notice") to the Company. The Transfer Notice shall
state the terms and conditions of such offer, including the name
of the prospective purchaser, the proposed purchase price per
share of such Shares (the "Offer Price"), payment terms (including
a description of any proposed non-cash consideration), the type of
disposition and the number of such Shares to be transferred
("Offered Shares"). The Transfer Notice shall further state that
the Company may acquire, in accordance with the provisions of this
Agreement, any of the Offered Shares for the price and upon the
other terms and conditions, including deferred payment (if
applicable), set forth therein.
(ii) For a period of ten Business Days after receipt of the
Transfer Notice (the "Option Period"), the Company may, by notice
in writing to the Offeror delivering such Transfer Notice, elect in
writing to purchase all, but not less than all, of the Offered
Shares at the Offer Price. The closing of the purchase of Shares
pursuant to Section 3.5, shall take place at the principal office
of the Company on the tenth day after the expiration of the Option
Period. At such Closing, the Company shall deliver to the
Offeror, against delivery of certificates duly endorsed and stock
powers representing the Shares being acquired by the Company, the
Offer Price, on the same terms as set forth in the Transfer Notice
(including any non-cash consideration described therein), payable
in respect of the Shares being purchased by the Company. All of
the foregoing deliveries will be deemed to be made simultaneously,
and none shall be deemed completed until all have been completed.
(b) The provisions of Section 3.6(a) shall not apply to a
Management Shareholder (other than a Primary Executive) if such Management
Shareholder Transfers Shares aggregating, with all other prior Transfers of
Shares by such Management Shareholder, an amount less than 25% of such
Management Shareholder's Initial Ownership.
Section 3.7 Notifications Regarding Transfers. To the
extent that either an Institutional Shareholder proposes a Transfer pursuant
to Section 3.4(iv) or a Management Shareholder proposes a Transfer pursuant to
Section 3.5(a)(iii), such Shareholder shall provide notice to THL at least
five Business Days prior to the proposed Transfer Date of the number of Shares
proposed to be Transferred. Not less that two Business Days prior to the
proposed Transfer Date, THL shall notify such Shareholder of whether the
Transfer is believed to be permitted based on the formulas set forth in Section
3.4(iv) or 3.5(a)(iii), as applicable.
ARTICLE IV
TAG-ALONG RIGHTS; DRAG-ALONG RIGHTS; PREEMPTIVE RIGHTS
Section 4.1 Rights to Participate in Transfer. (a) If the
THL Entities propose to Transfer (a "Tag-Along Sale") shares of a class of
Equity Securities, other than Transfers of shares of such class (i) in a
Public Offering pursuant to the exercise of their rights under Article 5, (ii)
to any THL Designated Transferee or (iii) up to the Threshold Percentage, the
Non-THL Shareholders may, at their option, elect to exercise their rights
under this Section 4.1 (each such Shareholder, a "Tag-Along Person); provided,
however, that the exception set forth in clause (iii) shall not apply to the
Primary Executives. The "Threshold Percentage" shall equal 5% in the
aggregate of the THL Entities' Initial Ownership of such class of Equity
Securities.
(b) In the event of a proposed Transfer in accordance
with paragraph (a) above, THL shall provide each Non-THL Shareholder written
notice of the terms and conditions of such proposed Transfer ("Tag-Along
Notice") at least 10 days prior to such proposed Transfer and offer each
Tag-Along Person the opportunity to participate in such sale. The Tag-Along
Notice shall identify the number of shares of such class of Equity Securities
to be sold in the Tag-Along Sale ("Tag-Along Offer"), the price at which the
Transfer is proposed to be made, and all other material terms and conditions
of the Tag-Along Offer, including the form of the proposed agreement, if any.
From the date of the Tag-Along Notice, each Tag-Along Person shall have the
right (a "Tag-Along Right"), exercisable by written notice ("Tag-Along
Response Notice") given to THL within 5 Business Days (the "Tag-Along Notice
Period"), to request that THL include in the proposed Transfer the number of
shares of such class of Equity Securities held by such Tag-Along Person as is
specified in such notice; provided that if the aggregate number of shares of
such class of Equity Securities proposed to be sold by the THL Entities and all
Tag-Along Persons in such transaction exceeds the number of shares of such
class of Equity Securities which can be sold on the terms and conditions set
forth in the Tag-Along Notice, then only the Tag-Along Portion of shares of
the THL Entities and each Tag-Along Person shall be sold pursuant to the
Tag-Along Offer. "Tag-Along Portion" means, with respect to any class of
Equity Securities, the number of shares of such class held (or, without
duplication, that such Shareholder has the right to acquire from any Person)
by the Tag-Along Person or THL, as the case may be, multiplied by a fraction,
the numerator of which is the maximum number of shares of such class subject
to the Tag-Along Offer and the denominator of which is the aggregate number of
shares of such class on a Fully Diluted basis owned by all Shareholders. In
the event the THL Entities shall propose to Transfer a number of shares of
such class in excess of the Threshold Percentage, the Tag-Along Portion shall
be calculated with respect to all of the shares proposed to be Transferred by
the THL Entities. To the extent that the Tag-Along Notice provides that
shares of Common Stock and Equity Warrants will be transferred (i) the Equity
Warrants and the Common Stock shall be treated as part of a single class of
Equity Securities and, if applicable, Equity Warrants are referred to in this
Section 4.1 as "shares" of such class, (ii) the calculations described in this
Section 4.1 with respect to such Tag-Along Notice shall include the number of
shares of Common Stock issuable upon exercise of such Equity Warrants and
(iii) the allocation between Equity Warrants and shares of Common Stock
subject to the Tag-Along Rights will be proportional to the allocation of the
number of Shares subject to the Tag-Along Notice as compared with the number
of Equity Warrants subject to the Tag-Along Notice.
(c) If the Tag-Along Persons exercise their Tag-Along
Rights hereunder, each Tag-Along Person shall deliver, together with its
Tag-Along Response Notice, to THL the certificate or certificates representing
the Shares of such Tag-Along Person to be included in the Transfer, together
with a limited power-of-attorney authorizing THL to Transfer such Shares on
the terms set forth in the Tag-Along Notice. It is understood that to the
extent THL can do so without affecting the other terms on which the Tag-Along
Sale is proposed to be made, THL will seek to exclude from the terms of such
Tag-Along Sale any material restrictions on the ability, following such
Tag-Along Sale, of any Tag-Along Person to conduct its business in a manner
consistent with past practice. Delivery of such certificate or certificates
representing the shares to be Transferred and the limited power-of-attorney
authorizing THL to Transfer such shares shall constitute an irrevocable
acceptance of the Tag-Along Offer by such Tag-Along Persons. If, at the end
of a 120 day period after such delivery, THL has not completed the Transfer of
all such shares on substantially the same terms and conditions set forth in
the Tag-Along Notice, THL shall return to each Tag-Along Person the limited
power-of-attorney (and all copies thereof) together with all certificates
representing the shares which such Tag-Along Person delivered for Transfer
pursuant to this Section 4.1.
(d) Concurrently with the consummation of the
Tag-Along Sale, THL shall notify the Tag-Along Persons thereof, shall remit to
the Tag-Along Persons the total consideration (by bank or certified check) for
the Shares of the Tag-Along Persons Transferred pursuant thereto, and shall,
promptly after the consummation of such Tag-Along Sale furnish such other
evidence of the completion and time of completion of such Transfer and the
terms thereof as may be reasonably requested by the Tag-Along Persons.
(e) If at the termination of the Tag-Along Notice
Period any Tag-Along Person shall not have elected to participate in the
Tag-Along Sale, such Tag-Along Person will be deemed to have waived its rights
under Section 4.1(a), with respect to the Transfer of its securities pursuant
to such Tag-Along Sale.
(f) If any Tag-Along Person declines to exercise its
Tag-Along Rights or elects to exercise its Tag-Along Rights with respect to
less than such Tag-Along Person's Tag-Along Portion, the THL Entities shall be
entitled to Transfer, pursuant to the Tag-Along Offer, a number of shares held
by the THL Entities equal to the number of shares constituting the portion of
such Tag-Along Person's Tag-Along Portion with respect to which Tag-Along
Rights were not exercised.
(g) THL may sell, on behalf of the THL Entities and
any Tag-Along Person who exercises the Tag-Along Rights pursuant to this
Section 4.1, the shares subject to the Tag-Along Offer on the terms and
conditions set forth in the Tag-Along Notice within 120 days of the date on
which Tag-Along Rights shall have been waived, exercised or expire.
Section 4.2 Right to Compel Participation in Certain
Transfers. (a) If (i) the THL Entities propose to Transfer not less than 50%
of their Initial Ownership of Common Stock to a Third Party in a bona fide
sale or (ii) the THL Entities propose a Transfer in which the shares of Common
Stock to be Transferred by Shareholders constitute more than 50% of the
outstanding shares of Common Stock (a "Drag-Along Sale"), THL may at its option
require all Shareholders to sell all Equity Securities proposed to be sold
therein ("Drag-Along Rights") then held by every Non-THL Shareholder, and
(subject to and at the closing of the Drag-Along Sale) to compel to exercise
all, but not less than all, of the Derivatives (whether then vested or
unvested) held by every Non-THL Shareholder and to sell all of the Shares
received upon such exercise to such Third Party, for the same consideration
and otherwise on the same terms and conditions as the THL Entities; provided,
that any Non-THL Shareholder who holds Derivatives the exercise price per
share of which is greater than the per share price at which the Shares are to
be sold to the Third Party may, if required by THL to exercise such
Derivatives, in place of such exercise, submit to irrevocable cancellation
thereof without any liability for payment of any exercise price with respect
thereto; provided, further, that, upon such Drag-Along Sale, the Primary
Executives shall have the right, but not the obligation, to require the Equity
Investors to, at THL's option, either arrange for the purchase by a third
party or purchase directly all of the Shares held by such Primary Executive as
a condition to consummation of such Drag-Along Sale and, in which case the
number of shares to be sold by each Equity Investor will be reduced on a
proportional basis. The number of shares of each class of Equity Securities
to be sold by each Non-THL Shareholder will be the Drag-Along Portion of the
shares of such class that such Non-THL Shareholder owns. "Drag-Along Portion"
means, with respect to any Non-THL Shareholder and any class of Equity
Securities, the number of Shares of such class of Equity Securities
beneficially owned by such Non-THL Shareholder multiplied by a fraction, the
numerator of which is the number of shares of such class of Equity Securities
proposed to be sold by the THL Entities on behalf of the THL Entities and the
Non-THL Shareholders (as reduced by the number of shares of such class of
Equity Securities to be sold by the Primary Executives in excess of their pro
rata interest) and the denominator of which is the total number of shares of
such class of Equity Securities beneficially owned by the Shareholders. In
the event the Drag-Along Sale is not consummated with respect to any shares
acquired upon exercise of Derivatives, such Derivatives shall be deemed not to
have been exercised or cancelled, as applicable. To the extent the Drag-Along
Sale relates to Derivatives, and THL determines not to compel the exercise
thereof, the Derivatives shall be treated as a separate class of Equity
Securities and, if applicable, Derivatives are referred to in this Section 4.2
as "shares" of such class.
(b) THL shall provide written notice of such
Drag-Along Sale to the Non-THL Shareholders (a "Drag-Along Notice") not later
than the fifteenth day prior to the proposed Drag-Along Sale. The Drag-Along
Notice shall identify the Transferee, the number of shares of any class of
Equity Securities, the consideration for which a Transfer is proposed to be
made for each class of Equity Securities (the "Drag-Along Sale Price(s)") and
all other material terms and conditions of the Drag-Along Sale. Subject to
Section 4.2(d), each Non-THL Shareholder shall be required to participate in
the Drag-Along Sale on the terms and conditions set forth in the Drag-Along
Notice and to tender all its Shares as set forth below. It is understood that
to the extent THL can do so without affecting the other terms on which the
Drag-Along Sale is proposed to be made, THL will seek to exclude from the
terms of such Drag-Along Sale any material restrictions on the ability,
following such Drag-Along Sale, of any Non-THL Shareholder to conduct its
business in a manner consistent with past practice. The price(s) payable in
such Transfer shall be the Drag-Along Sale Price(s). Not later than the tenth
day following the date of the Drag-Along Notice (the "Drag-Along Notice
Period"), each of the Non-THL Shareholders shall deliver to a representative
of THL designated in the Drag-Along Notice certificates representing all the
Shares beneficially owned and held by such Non-THL Shareholder, duly endorsed,
(or evidence of title and ownership of any Derivative which are subject to the
Drag-Along Sale but which are not exercised in connection therewith) together
with all other documents required to be executed in connection with such
Drag-Along Sale, or if such delivery is not permitted by applicable law, an
unconditional agreement to deliver such shares pursuant to this Section 4.2 at
the closing for such Drag-Along Sale against delivery to such Non-THL
Shareholder of the consideration therefor. If a Non-THL Shareholder should
fail to deliver such certificates to THL, the Company shall cause the books
and records of the Company to show that such shares are bound by the
provisions of this Section 4.2 and that such shares shall be Transferred to
the purchaser of the shares immediately upon surrender for Transfer by the
holder thereof.
(c) The THL Entities shall have a period of 90 days
from the date of receipt of the Drag-Along Notice to consummate the Drag-Along
Sale on the terms and conditions set forth in such Drag-Along Sale Notice. If
the Drag-Along Sale shall not have been consummated during such period, THL
shall return to each of the Non-THL Shareholders all certificates or other
evidence of title and ownership representing shares that such Non-THL
Shareholder delivered for Transfer pursuant hereto, together with any
documents in the possession of THL executed by the Non-THL Shareholder in
connection with such proposed Transfer, and all the restrictions on Transfer
contained in this Agreement or otherwise applicable at such time with respect
to shares owned by the Non-THL Shareholders shall again be in effect.
(d) Concurrently with the consummation of the
Transfer of shares pursuant to this Section 4.2, THL shall give notice thereof
to all Shareholders, shall remit to each of the Shareholders who have
surrendered their certificates or other evidence of title and ownership the
total consideration (by bank or certified check) for the shares Transferred
pursuant hereto and shall furnish such other evidence of the completion and
time of completion of such Transfer and the terms thereof as may be reasonably
requested by such Shareholders.
(e) Notwithstanding any provision of this Agreement
to the contrary, in the event the terms on which a Drag-Along Sale is proposed
to be made shall include a provision which materially and adversely affects
the ability of any Non-THL Shareholder to compete in any line of business or
geographic area, such Non-THL Shareholder shall not be required to participate
in the Drag-Along Sale on the terms and conditions set forth in the Drag-Along
Notice. In the event any Shareholder shall elect, pursuant to the preceding
sentence, not to participate in the Drag-Along Sale, THL Entities and their
THL Designated Transferees shall have the right to purchase, and such
Shareholder shall be obligated to sell to the THL Entities and their THL
Designated Transferees such Shareholder's shares, at the Drag-Along Sale
Price(s) and on substantially the same terms (other than any such non-compete
provision), not later than immediately prior to the consummation of the
Drag-Along Sale. Except as provided above, in connection with any Drag-Along
Sale, all Shareholders shall be subject to (i) the same terms and conditions
of sale and (ii) the same indemnity, contribution, hold-back, escrow or similar
obligations.
Section 4.3 Preemptive Rights. (a) The Company shall
provide each Shareholder with a written notice (a "Preemptive Rights Notice")
of any proposed issuance by the Company of Equity Securities at least 10 days
prior to the proposed issuance date. Such notice shall specify the price at
which the Equity Securities are to be issued and the other material terms of
the issuance.
(i) In the event the Company shall issue any New
Common Securities or New Preferred Securities (collectively, the
"New Securities") to any third party (including any Shareholder)
prior to a Qualifying Public Offering, the THL Entities and each
Management Shareholder shall be entitled to purchase, at the price
and on the terms at which such New Securities are proposed to be
issued and specified in such Preemptive Rights Notice, the THL
Entities' or such Management Shareholder's Preemptive Rights
Portion of such class of the New Securities proposed to be issued.
"Preemptive Rights Portion" means, with respect to New Common
Securities, the pro rata portion of New Common Securities proposed
to be issued by the Company, which amount shall be based upon such
Shareholder's Initial Ownership of shares of Common Stock as a
percentage of the sum of the Initial Ownership of shares of Common
Stock of (A) the THL Entities, (B) all Institutional Shareholders
and (C) all Management Shareholders and, with respect to New
Preferred Securities, the pro rata portion of New Preferred
Securities proposed to be issued by the Company, which amount
shall be based upon such Shareholder's Initial Ownership of shares
of Preferred Stock as a percentage of the sum of the Initial
Ownership of shares of Preferred Stock of (A) the THL Entities and
(B) all Institutional Shareholders.
(ii) In the event that the Company shall issue any
New Securities to any third party (including any Shareholder)
following a Qualifying Public Offering, the THL Entities shall
be entitled to purchase, at the price and on the terms at which
such New Securities are proposed to be issued and specified in
such Preemptive Rights Notice, the THL Entities' Preemptive
Rights Portion of such class of the New Securities proposed to
be issued.
(iii) In the event the THL Entities propose to
purchase any New Securities from the Company pursuant to 4.3(a)(i)
or (ii) or otherwise, (A) prior to a Qualifying Public Offering,
each Institutional Shareholder, and (B) following a Qualifying
Public Offering, each Non-THL Shareholder shall be entitled to
purchase, at the price and on the terms at which the THL Entities
propose to purchase such New Securities and specified in such
Preemptive Rights Notice, such Shareholder's Preemptive Rights
Portion of such class of the New Securities proposed to be issued
in the transaction giving rise to the THL Entities' proposed
purchase of New Securities; provided, however, such Shareholders
shall not be entitled to purchase New Securities unless the THL
Entities complete the purchase of New Securities in accordance
with the Preemptive Rights Notice.
A Shareholder may exercise its rights under this Section 4.3
by delivering written notice of its election to purchase New Securities to the
Company, THL and each Non-THL Shareholder within five days of receipt of the
Preemptive Rights Notice. A delivery of such a written notice (which notice
shall specify the number of New Securities to be purchased by the Shareholder
submitting such notice) by such Shareholder shall constitute a binding
agreement of such Shareholder to purchase, subject to the purchase by THL of
its portion of such New Securities, at the price and on the terms specified in
the Preemptive Rights Notice, the number of New Securities specified in such
Shareholder's written notice.
(b) In the event any Non-THL Shareholder declines to
exercise its preemptive rights under this Section 4.3 or elects to exercise
such rights with respect to less than such Shareholder's Preemptive Rights
Portion, the THL Entities shall have the right to purchase, or any Non-THL
Shareholder designated by THL shall have the right to purchase, from the
Company the number of New Securities constituting the Preemptive Rights
Portion with respect to which such Non-THL Shareholder shall not have
exercised its preemptive rights.
(c) In the case of any issuance of New Securities,
the Company shall have 90 days from the date of the Preemptive Rights Notice
to consummate the proposed issuance of any or all of such New Securities which
the Shareholders have not elected to purchase at the price and upon terms that
are not materially less favorable to the Company than those specified in the
Preemptive Rights Notice. At the consummation of such issuance, the Company
shall issue certificates representing the New Securities to be purchased by
each Shareholder exercising preemptive rights pursuant to this Section 4.3
registered in the name of such Shareholder, against payment by such
Shareholder of the purchase price for such New Securities. If the Company
proposes to issue New Securities after such 90-day period, it shall again
comply with the procedures set forth in this Section.
(d) Notwithstanding the foregoing, no Shareholder
shall be entitled to purchase New Securities as contemplated by this Section
4.3 in connection with issuances of New Securities (i) to employees of the
Company or any Subsidiary pursuant to employee benefit plans or arrangements
approved by the Board (including upon the exercise of employee stock options),
or (ii) in connection with any bona fide, arm's-length restructuring or
refinancing of outstanding indebtedness (including convertible indebtedness)
of the Company or any Subsidiary. The Company shall not be under any
obligation to consummate any proposed issuance of New Securities, regardless
of whether it shall have delivered a Preemptive Rights Notice in respect of
such proposed issuance.
(e) The Company will use its reasonable best efforts
to provide the Preemptive Rights Notice at least 15 Business Days prior to any
proposed issuance of New Securities. In the event it is impracticable to
provide the Preemptive Rights Notice at least 15 Business Days prior to such
issuance, any Shareholder may offer to finance or arrange to finance the
purchase by any other Shareholder of such other Shareholder's Preemptive Rights
Portion and such financing or arranging Shareholder shall be entitled to
receive as compensation for such services reasonable and customary fees and
expenses. No Shareholder shall be under any obligation to provide or arrange
such financing for any other Shareholder.
Section 4.4. Certain Other Purchases of Equity Securities.
In the event, at any time after the date hereof and prior to the Trigger Date,
the THL Entities shall acquire any Equity Securities from any Person other
than the Shareholders, THL shall deliver, within five Business Days of the
date of such acquisition, a notice to each Equity Investor (a "Third Party
Purchase Notice") specifying the class of Equity Securities, the number of
shares of such class acquired and the weighted average of price per share paid
by the THL Entities. Such Third Party Purchase Notice shall constitute an
offer to each such Shareholder to purchase such Shareholder's Third Party
Purchase Portion of the number of shares of such class acquired by the THL
Entities. A Shareholder may exercise its rights under this Section 4.4 by
delivering written notice of its election to purchase its Third Party Purchase
Portion within ten days of receipt of the Third Party Purchase Notice. A
delivery of such written notice (which shall specify the number of shares of
such class of Equity Securities to be purchased by the Shareholder submitting
such notice) by such Shareholder shall constitute a binding agreement of such
Shareholder to purchase, at the price and on the terms specified in the Third
Party Purchase Notice, the number of shares of a class of Equity Securities
specified in such notice. At the consummation of the Transfer of the shares
of a class of Equity Securities purchased by the THL Entities to any
Shareholder that has exercised its right hereunder, the THL Entities shall
deliver to such Shareholder certificates or other evidence of title and
ownership representing the shares such class of Equity Securities to be
purchased against payment by such Shareholder of the purchase price for such
shares of Equity Securities. "Third Party Purchase Portion" means, with
respect to any Shareholder at any time, the number of shares of the class of
Equity Securities purchased by the THL Entities in a transaction subject to
Section 4.4, multiplied by a fraction, the numerator of which is (i) the
number of shares of such class of Equity Securities on a Fully Diluted basis
that such Shareholder beneficially owns at such time, and the denominator of
which is (ii) the total number of shares of such class of Equity Securities on
a Fully Diluted basis beneficially owned at such time by all Equity Investors.
To the extent the Third Party Purchase Notice relates to Derivatives, such
Derivatives shall be treated as a separate class of Equity Securities and, if
applicable, Derivatives are referred to in this Section 4.4 as "shares" of
such class.
ARTICLE V
REGISTRATION RIGHTS
Section 5.1 Demand Registration. (a) If the Company shall
receive a written request by THL that the Company effect the registration
under the Securities Act of all or a portion of the THL Entities' Registrable
Securities, and specifying the intended method of disposition thereof, then
the Company shall promptly give written notice of such requested registration
(a "THL Demand Registration") at least five days prior to the anticipated
filing date of the registration statement relating to such THL Demand
Registration to the Non-THL Shareholders and thereupon will use its best
efforts to effect, as expeditiously as possible, the registration under the
Securities Act of:
(i) the Registrable Securities of the THL Entities
which the Company has been so requested to register; and
(ii) subject to the restrictions set forth in Section
5.2, all other Registrable Securities of the same class as that to
which THL's request relates for which an effective Piggyback
Registration (as such term is defined in Section 5.2) request has
been made;
provided, that subject to Section 5.1(d) hereof, the Company shall not be
obligated to effect more than six THL Demand Registrations. In no event will
the Company be required to effect more than one THL Demand Registration within
any four-month period.
(b) Promptly after the expiration of the 2-day
period referred to in Section 5.2(a) hereof, the Company will notify all the
Shareholders to be included in the THL Demand Registration (the "Holders") of
the other Holders and the number of Registrable Securities requested to be
included therein. THL may, at any time prior to the effective date of the
registration statement relating to such registration, revoke such request,
without liability to any of the other Holders, by providing a written notice
to the Company revoking such request, in which case such request, so revoked,
shall not be considered a THL Demand Registration.
(c) The Company will pay all Registration Expenses in
connection with any THL Demand Registration.
(d) A registration requested pursuant to this Section
5.1 shall not be deemed to have been effected (i) unless the registration
statement relating thereto (A) has become effective under the Securities Act
and (B) has remained effective for a period of at least 180 days (or such
shorter period in which all Registrable Securities of the Holders included in
such registration have actually been sold thereunder); provided, that if after
any registration statement requested pursuant to this Section 5.1 becomes
effective (x) such registration statement is interfered with by any stop
order, injunction or other order or requirement of the SEC or other
governmental agency or court and (y) less than 75% of the Registrable
Securities included in such registration statement has been sold thereunder,
such registration statement shall not be considered a THL Demand Registration,
or (ii) if the Maximum Offering Size (as defined below) is reduced in
accordance with Section 5.1(e) such that less than 66 2/3% of the Registrable
Securities of the THL Entities sought to be included in such registration are
included.
(e) If a THL Demand Registration involves an
Underwritten Public Offering and the managing underwriter shall advise the
Company and THL that, in its view, (i) the number of shares of Registrable
Securities requested to be included in such registration (including any
securities which the Company proposes to be included which are not Registrable
Securities) or (ii) the inclusion of some or all of the shares of Registrable
Securities owned by the Holders, in any such case, exceeds the largest number
of shares which can be sold without having an adverse effect on such offering,
including the price at which such shares can be sold (the "Maximum Offering
Size"), the Company will include in such registration, in the priority listed
below, up to the Maximum Offering Size:
(A) first, all Registrable Securities requested by THL
to be registered and all Registrable Securities requested to be
included in such registration by any other Holder pursuant to an
effective Piggyback Registration request (allocated, if necessary
for the offering not to exceed the Maximum Offering Size, pro rata
among the THL Entities and such Holders on the basis of the
relative number of Registrable Securities held by such
Shareholder); and
(B) second, any securities proposed to be registered
by the Company.
provided, however, that in such case, any Holder may elect to withdraw such
Holder's Registrable Securities from the registration.
(f) Upon written notice to THL, the Company may
postpone effecting a registration pursuant to this Section 5.1 on one occasion
during any period of six consecutive months for a reasonable time specified in
the notice but not exceeding 90 days (which period may not be extended or
renewed), if (i) an investment banking firm of recognized national standing
shall advise the Company and THL in writing that effecting the registration
would materially and adversely affect an offering of securities of the Company
the preparation of which had then been commenced or (ii) the Company has a
bona fide business reason for determining that it is in possession of material
non-public information the disclosure of which during the period specified in
such notice the Company believes, in its reasonable judgment, would not be in
the best interests of the Company.
(g) After the Company has effected two Demand
Registrations pursuant to this Section 5.1 of Common Stock, the Institutional
Shareholders, upon request of such Institutional Shareholders owning a
majority of the Shares acquired by such Institutional Shareholders on the
Closing Date, may request that the Company register shares of Registrable
Securities then owned by such Institutional Shareholders (an "Institutional
Shareholder Demand Registration"). In no event will the Company be required
to effect more than one such Institutional Shareholder Demand Registration.
The provisions of this Article 5 shall apply, mutatis mutandis, to any such
Institutional Shareholder Demand Registration.
(h) After the Transfer of Shares of Common Stock
representing more than 20% of the Shares collectively owned by the Equity
Investors of the Initial Ownership on a Fully Diluted basis owned by such
Equity Investors, the Primary Executives may request that the Company register
Shares which are Registrable Securities then owned by them (a "Primary
Executive Demand Registration"). In no event will the Company be required to
effect more than three such Primary Executive Demand Registrations. The
provisions of this Article 5 shall apply, mutatis mutandis, to any such
Primary Executive Demand Registration; provided, that, notwithstanding
anything to the contrary herein, (i) no Primary Executive Demand Registrations
may be made during the six month period following the Effective Time or within
six months after the effective date any other registration statement (other
than registration statement on From S-4 or S-8 or similar form), and (ii) the
Company must use its best efforts to effect such Primary Executive Demand
Registration as soon as practicable, but in no event later than 120 days
following the date of the demand.
Section 5.2 Piggyback Registration. (a) If the Company
proposes to register any Equity Securities under the Securities Act, whether
or not for sale for its own account (including pursuant to a Demand
Registration), in connection with a public offering (other than a public
offering pursuant to a registration statement filed in connection with a
transaction of the type described in Rule 145 of the Securities Act or for the
purpose of issuing securities pursuant to an employee benefit plan) it will
each such time, subject to the provisions of Section 5.2(b) hereof, give
prompt written notice at least five days prior to the anticipated filing date
of the registration statement relating to such registration to all
Shareholders and their respective Permitted Transferees (or, in the case of a
Demand Registration to all Shareholders and their Permitted Transferees other
than the Shareholder making the demand), which notice shall set forth such
Shareholders' rights under this Section 5.2 and shall offer all Shareholders
the opportunity to include in such registration statement such number of
shares of Common Stock as each such Shareholder may request (a "Piggyback
Registration"). Upon the written request of any such Shareholder made within
2 days (one of which shall be a Business Day) after the receipt of notice from
the Company (which request shall specify the number of Registrable Securities
intended to be disposed of by such Shareholder), the Company will use its
reasonable best efforts to effect the registration under the Securities Act of
all Registrable Securities which the Company has been so requested to register
by such Shareholders, to the extent requisite to permit the disposition of the
Registrable Securities so to be registered; provided, that (i) if such
registration involves an Underwritten Public Offering, all such Shareholders
requesting to be included in the Company's registration must sell their
Registrable Securities to the underwriters selected as provided in Section
5.4(f) on the same terms and conditions as apply to the Company or the other
selling Shareholder, as applicable, and (ii) if, at any time after giving
written notice of its intention to register on its own behalf any stock and
prior to the effective date of the registration statement filed in connection
with such registration, the Company shall determine for any reason not to
register such stock, the Company shall give written notice to all such
Shareholders and, thereupon, shall be relieved of its obligation to register
any Registrable Securities in connection with such registration. No
registration effected under this Section 5.2 on behalf of the Company shall
relieve the Company of its obligations to effect a Demand Registration, to the
extent required by Section 5.1 hereof. The Company will pay all Registration
Expenses in connection with each registration of Registrable Securities
requested pursuant to this Section 5.2.
(b) If a registration pursuant to this Section 5.2
involves an Underwritten Public Offering (other than in the case of an
Underwritten Public Offering resulting from a Demand Registration, in which
case the provisions with respect to priority of inclusion in such offering set
forth in Section 5.1(e) shall apply) and the managing underwriter advises the
Company that, in its view, the number of shares of Common Stock which the
Company and the selling Shareholders intend to include in such registration
exceeds the Maximum Offering Size, the Company will include in such
registration, in the following priority, up to the Maximum Offering Size:
(i) first, so much of the Equity Securities proposed
to be registered for the account of the Company as would not cause
the offering to exceed the Maximum Offering Size; and
(ii) second, all Registrable Securities requested to
be included in such registration by any Shareholder pursuant to an
effective Piggyback Registration request (allocated, if necessary
for the offering not to exceed the Maximum Offering Size, pro rata
among such Shareholders on the basis of the relative number of
shares of Registrable Securities held by such Shareholder).
Section 5.3 Holdback Agreements. With respect to each and
every firmly Underwritten Public Offering, each Shareholder (collectively with
all of its Affiliates which are Shareholders) owning Shares representing more
than 1% of the then outstanding Shares (including Shares which would be held
upon any conversion or exercise of rights) agrees, and their Permitted
Transferees will agree, not to offer or sell any Shares (except for Shares, if
any, sold in that Public Offering) during the period which commences on the
14th day prior to the effective date of the applicable registration statement
for a public offering of Shares (except as part of such registration) and ends
on the earlier of: (i) 180 days after the effective date of the registration
statement or (ii) any such shorter period as the Company and the lead managing
underwriter of an Underwritten Public Offering agree.
Section 5.4 Registration Procedures. Whenever Shareholders
request that any Registrable Securities be registered pursuant to Section 5.1
or 5.2 hereof, the Company will, subject to the provisions of such Sections,
use its best efforts, or reasonable best efforts, as the case maybe, to effect
the registration and the sale of such Registrable Securities in accordance
with the intended method of disposition thereof as quickly as practicable, and
in any event within 60 days of the date of demand and in connection with any
such request:
(a) The Company will as expeditiously as possible prepare
and file with the SEC a registration statement on any form
selected by counsel for the Company and which form shall be
available for the sale of the Registrable Securities to be
registered thereunder in accordance with the intended method of
distribution thereof, and use its best efforts to cause such filed
registration statement to become and remain effective for a period
of not less than 180 days (or such shorter period in which all of
the Registrable Securities of the Holders included in such
registration statement shall have actually been sold thereunder).
(b) The Company will, if requested, prior to filing a
registration statement or prospectus or any amendment or
supplement thereto, furnish to each Shareholder and each
underwriter, if any, of the Registrable Securities covered by such
registration statement copies of such registration statement as
proposed to be filed, and thereafter the Company will furnish to
such Shareholder and underwriter, if any, such number of copies of
such registration statement, each amendment and supplement thereto
(in each case including all exhibits thereto and documents
incorporated by reference therein), the prospectus included in
such registration statement (including each preliminary
prospectus) and such other documents as such Shareholder or
underwriter may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such
Shareholder. Each Shareholder shall have the right to request
that the Company modify any information contained in such
registration statement, amendment and supplement thereto
pertaining to such Shareholder and the Company shall use its
reasonable best efforts to comply with such request; provided,
however, that the Company shall not have any obligation to so
modify any information if so doing would cause the prospectus to
contain an untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to
make the statements therein not misleading.
(c) After the filing of the registration statement, the
Company will (i) cause the related prospectus to be supplemented
by any required prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 under the Securities Act, (ii) comply
with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities covered by such
registration statement during the applicable period in accordance
with the intended methods of disposition by the sellers thereof
set forth in such registration statement or supplement to such
prospectus and (iii) promptly notify each Shareholder holding
Registrable Securities covered by such registration statement of
any stop order issued or threatened by the SEC or any state
securities commission under state blue sky laws and take all
reasonable actions required to prevent the entry of such stop
order or to remove it if entered.
(d) The Company will use its best efforts to (i) register
or qualify the Registrable Securities covered by such registration
statement under such other securities or blue sky laws of such
jurisdictions in the United States as the Managing Underwriter or
any Shareholder or Shareholders holding such Registrable
Securities reasonably (in light of such Shareholder's intended
plan of distribution) requests and (ii) cause such Registrable
Securities to be registered with or approved by such other
governmental agencies or authorities as may be necessary by virtue
of the business and operations of the Company and do any and all
other acts and things that may be reasonably necessary or
advisable to enable such Shareholder to consummate the disposition
of the Registrable Securities owned by such Shareholder; provided,
however, that the Company will not be required to (A) qualify
generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this paragraph (d), (B)
subject itself to taxation in any such jurisdiction or (C) consent
to general service of process in any such jurisdiction.
(e) The Company will immediately notify each Shareholder
holding such Registrable Securities covered by such registration
statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the
occurrence of an event requiring the preparation of a supplement
or amendment to such prospectus so that, as thereafter delivered
to the purchasers of such Registrable Securities, such prospectus
will not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary
to make the statements therein not misleading and promptly prepare
and make available to each such Shareholder and file with the SEC
any such supplement or amendment.
(f) In connection with (i) (A) any THL Demand Registration
or (B) any registration by the Company of Registrable Securities,
the Company shall appoint the underwriter or underwriters chosen
by THL and (ii) (A) any Institutional Shareholder Demand
Registration or (B) any Primary Executive Demand Registration, the
Company shall appoint the underwriter or underwriters chosen by
Shareholders holding the majority of the Registrable Securities to
be registered; provided, that the underwriter or underwriters
identified in accordance with clauses (ii)(A) and (ii)(B) shall be
reasonably acceptable to the Company. The Company will enter into
customary agreements (including an underwriting agreement in
customary form) and take such other actions as are reasonably
required in order to expedite or facilitate the disposition of
such Registrable Securities, including the engagement of a
"qualified independent underwriter" in connection with the
qualification of the underwriting arrangements with the NASD.
(g) Upon execution of confidentiality agreements in form
and substance reasonably satisfactory to the Company, the Company
will make available for inspection by any Shareholder and any
underwriter participating in any disposition pursuant to a
registration statement being filed by the Company pursuant to this
Section 5.4 and any attorney, accountant or other professional
retained by any such Shareholder or underwriter (collectively, the
"Inspectors"), all financial and other records, pertinent
corporate documents and properties of the Company (collectively,
the "Records") as shall be reasonably requested by any such
Person, and cause the Company's officers, directors and employees
to supply all information reasonably requested by any Inspectors
in connection with such registration statement.
(h) The Company will furnish to each such Shareholder and
to each such underwriter, if any, a signed counterpart, addressed
to such underwriter and the participating Shareholders, of (i) an
opinion or opinions of counsel to the Company and (ii) a comfort
letter or comfort letters from the Company's independent public
accountants, each in customary form and covering such matters of
the type customarily covered by opinions or comfort letters, as the
case may be, as a majority of such Shareholders or the managing
underwriter therefor reasonably requests.
(i) The Company will otherwise use its best efforts to
comply with all applicable rules and regulations of the SEC and
the relevant state blue sky commissions, and make available to its
securityholders, as soon as reasonably practicable, an earnings
statement covering a period of 12 months, beginning within three
months after the effective date of the registration statement,
which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act.
(j) The Company may require each such Shareholder to
promptly furnish in writing to the Company information regarding
the distribution of the Registrable Securities as the Company may
from time to time reasonably request and such other information
as may be legally required in connection with such registration.
(k) Each such Shareholder agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind
described in Section 5.4(e) hereof, such Shareholder will
forthwith discontinue disposition of Registrable Securities
pursuant to the registration statement covering such Registrable
Securities until such Shareholder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 5.4(e)
hereof, and, if so directed by the Company, such Shareholder will
deliver to the Company all copies, other than any permanent file
copies then in such Shareholder's possession, of the most recent
prospectus covering such Registrable Securities at the time of
receipt of such notice. In the event that the Company shall give
such notice, the Company shall extend the period during which such
registration statement shall be maintained effective (including
the period referred to in Section 5.4(a) hereof) by the number of
days during the period from and including the date of the giving
of notice pursuant to Section 5.4(e) hereof to the date when the
Company shall make available to such Shareholder a prospectus
supplemented or amended to conform with the requirements of Section
5.4(e) hereof.
(l) The Company will use its best efforts to list such
Registrable Securities on any securities exchange on which the
Common Stock is then listed or on NASDAQ if the Common Stock is
then quoted on NASDAQ not later than the effective date of such
registration statement.
Section 5.5 Indemnification by the Company. The Company
agrees to indemnify and hold harmless each Shareholder holding Registrable
Securities covered by a registration statement, its officers, directors,
employees, partners and agents, and each Person, if any, who controls such
Shareholder within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act (and officers, directors, employees, partners and
agents of such controlling Persons) from and against any and all losses,
claims, damages, joint or several liabilities or expenses (including
reasonable attorneys' fees and expenses and reasonable costs of investigation)
caused by any untrue statement or alleged untrue statement of a material fact
contained in any registration statement or prospectus relating to the
Registrable Securities (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) or any preliminary
prospectus, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission or
alleged untrue statement or omission so made in strict conformity with
information furnished in writing to the Company by such Shareholder or on such
Shareholder's behalf expressly for use therein; provided that with respect to
any untrue statement or omission or alleged untrue statement or omission made
in any preliminary prospectus, or in any final prospectus, as the case may be,
the indemnity agreement contained in this paragraph shall not apply to the
extent that any such loss, claim, damage, liability or expense results from
the fact that a current copy of the final prospectus (or, in the case of a
final prospectus, the final prospectus as amended or supplemented) was not
sent or given to the Person asserting any such loss, claim, damage, liability
or expense at or prior to the written confirmation of the sale of the
Registrable Securities concerned to such Person if it is determined that the
Company has provided such current copy of such final prospectus (or such
amended or supplemented prospectus, as the case may be) to such Shareholder in
a timely manner prior to such sale and it was the responsibility of such
Shareholder under the Securities Act to provide such Person with a current
copy of the prospectus (or such amended or supplemented prospectus, as the case
may be) and such current copy of the final prospectus (or such amended or
supplemented prospectus, as the case may be) would have cured the defect
giving rise to such loss, claim, damage, liability or expense. The Company
also agrees to indemnify any underwriters of the Registrable Securities, their
officers and directors and each person who controls such underwriters on
substantially the same basis as that of the indemnification of the Shareholders
provided in this Section 5.5.
Section 5.6 Indemnification by Participating Shareholders.
Each Shareholder holding Registrable Securities included in any registration
statement agrees, severally but not jointly, to indemnify and hold harmless
the Company, its officers, directors and agents and each Person (other than
such Shareholder) if any, who controls the Company within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act to
the same extent as the foregoing indemnity from the Company to such
Shareholder, but only (i) with respect to information furnished in writing by
such Shareholder or on such Shareholder's behalf expressly for use in any
registration statement or prospectus relating to the Registrable Securities,
or any amendment or supplement thereto, or any preliminary prospectus or (ii)
to the extent that any loss, claim, damage, liability or expense described in
Section 5.5 results from the fact that a current copy of the final prospectus
(or, in the case of a prospectus, the prospectus as amended or supplemented)
was not sent or given to the Person asserting any such loss, claim, damage,
liability or expense at or prior to the written confirmation of the sale of
the Registrable Securities concerned to such Person if it is determined that
it was the responsibility of such Shareholder to provide such Person with a
current copy of the final prospectus (or such amended or supplemented
prospectus, as the case may be) and such current copy of the final prospectus
(or such amended or supplemented prospectus, as the case may be) would have
cured the defect giving rise to such loss, claim, damage, liability or
expense. Each such Shareholder shall be prepared, if required by the
underwriting agreement, to indemnify and hold harmless underwriters of the
Registrable Securities, their officers and directors and each person who
controls such underwriters on substantially the same basis as that of the
indemnification of the Company provided in this Section 5.6. As a condition
to including Registrable Securities in any registration statement filed in
accordance with Article 5 hereof, the Company may require that it shall have
received an undertaking reasonably satisfactory to it from any underwriter to
indemnify and hold it harmless to the extent customarily provided by
underwriters with respect to similar securities.
No Shareholder shall be liable under Section 5.6 for any
damage thereunder in excess of the net proceeds realized by such Shareholder
in the sale of the Registrable Securities of such Shareholder.
Section 5.7 Conduct of Indemnification Proceedings. In
case any proceeding (including any governmental investigation) shall be
instituted involving any Person in respect of which indemnity may be sought
pursuant to this Article 5, such Person (an "Indemnified Party") shall
promptly notify the Person against whom such indemnity may be sought (the
"Indemnifying Party") in writing and the Indemnifying Party shall assume the
defense thereof, including the employment of counsel reasonably satisfactory
to such Indemnified Party, and shall assume the payment of all fees and
expenses; provided that the failure of any Indemnified Party so to notify the
Indemnifying Party shall not relieve the Indemnifying Party of its obligations
hereunder except to the extent that the Indemnifying Party is materially
prejudiced by such failure to notify. In any such proceeding, any Indemnified
Party shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party
unless (i) the Indemnifying Party and the Indemnified Party shall have
mutually agreed to the retention of such counsel or (ii) in the reasonable
judgment of such Indemnified Party representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. It is understood that the Indemnifying Party shall not, in
connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) at any time for
all such Indemnified Parties, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm for
the Indemnified Parties, such firm shall be designated in writing by the
Indemnified Parties. The Indemnifying Party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent, or if there be a final judgment for the plaintiff,
the Indemnifying Party shall indemnify and hold harmless such Indemnified
Parties from and against any and all losses, claims, damages, liabilities and
expenses or liability (to the extent stated above) by reason of such
settlement or judgment. No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, effect any settlement of any pending
or threatened proceeding in respect of which any Indemnified Party is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability arising out of such proceeding.
Section 5.8 Contribution. If the indemnification provided
for in this Article 5 is held by a court of competent jurisdiction to be
unavailable to the Indemnified Parties in respect of any losses, claims,
damages or liabilities referred to herein, then each such Indemnifying Party,
in lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such losses, claims,
damages or liabilities (i) as between the Company and the Shareholders holding
Registrable Securities covered by a registration statement and their related
Indemnified Parties on the one hand and the underwriters and their related
Indemnified Parties on the other, in such proportion as is appropriate to
reflect the relative benefits received by the Company and such Shareholders on
the one hand and the underwriters on the other, from the offering of the
Shareholders' Registrable Securities, or if such allocation is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits but also the relative fault of the Company and such
Shareholders on the one hand and of such underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations and (ii) as between the Company and their related Indemnified
Parties on the one hand and each such Shareholder and their related Indemnified
Parties on the other, in such proportion as is appropriate to reflect the
relative fault of the Company and of each such Shareholder in connection with
such statements or omissions, as well as any other relevant equitable
considerations. The relative benefits received by the Company and such
Shareholders on the one hand and such underwriters on the other shall be
deemed to be in the same proportion as the total proceeds from the offering
(net of underwriting discounts and commissions but before deducting expenses)
received by the Company and such Shareholders bear to the total underwriting
discounts and commissions received by such underwriters, in each case as set
forth in the table on the cover page of the prospectus. The relative fault of
the Company and such Shareholders on the one hand and of such underwriters on
the other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company and such Shareholders or by such underwriters. The relative fault
of the Company on the one hand and of each such Shareholder on the other shall
be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by such
party, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and the Shareholders agree that it would not be
just and equitable if contribution pursuant to this Section 5.8 were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an Indemnified
Party as a result of the losses, claims, damages or liabilities referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred
by such Indemnified Party in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this Section 5.8 no
underwriter shall be required to contribute any amount in excess of the
underwriting discount applicable to securities purchased by such underwriter
in such offering, less the aggregate amount of any damages which such
underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission, and no Shareholder
shall be required to contribute any amount in excess of the amount by which
the net proceeds realized on the sale of the Registrable Securities of such
Shareholder exceeds the amount of any damages which such Shareholder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. Each Shareholder's obligation to contribute
pursuant to this Section 5.8 is several in the proportion that the proceeds of
the offering received by such Shareholder bears to the total proceeds of the
offering received by all such Shareholders and not joint.
Section 5.9 Participation in Public Offering. No Person
may participate in any Underwritten Public Offering hereunder unless such
Person (a) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to
approve such arrangements and (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements and the
provisions of this Agreement in respect of registration rights.
Section 5.10 Cooperation by the Company. In the event any
Shareholder shall Transfer any Registrable Securities pursuant to Rule 144A
under the Securities Act, the Company shall cooperate, to the extent
commercially reasonable, with such Shareholder and shall provide to such
Shareholder such information as such Shareholder shall reasonably request.
Section 5.11 No Transfer of Registration Rights. None of
the rights of Shareholders under this Article 5 shall be assignable by any
Shareholder to any Person acquiring securities of such Shareholder in any
Public Offering or pursuant to Rule 144A of the Securities Act.
ARTICLE VI
CERTAIN COVENANTS AND AGREEMENTS
Section 6.1 Confidentiality. (a) Each Shareholder hereby
agrees that Confidential Information (as defined below) furnished and to be
furnished to it was and will be made available in connection with such
Shareholder's investment in the Company. Each Shareholder agrees that it will
use the Confidential Information only in connection with its investment in the
Company and not for any other purpose. Each Shareholder further acknowledges
and agrees that it will not disclose any Confidential Information to any
Person; provided that Confidential Information may be disclosed (i) to such
Shareholder's Representatives (as defined below) in the normal course of the
performance of their duties or to any financial institution providing credit
to such Shareholder, (ii) to the extent required by applicable law, rule or
regulation (including complying with any oral or written questions,
interrogatories, requests for information or documents, subpoena, civil
investigative demand or similar process to which a Shareholder is subject;
provided that such Shareholder gives the Company prompt notice of such
request(s), to the extent practicable, so that the Company may seek an
appropriate protective order or similar relief (and the Shareholder shall
cooperate with such efforts by the Company, and shall in any event make only
the minimum disclosure required by such law, rule or regulation)), (iii) to
any Person to whom such Shareholder is contemplating a Transfer of its Shares
(provided that such Transfer would not be in violation of the provisions of
this Agreement and as long as such potential Transferee is advised of the
confidential nature of such information and agrees to be bound by a
confidentiality agreement in form and substance satisfactory to the Company
(it being understood that a confidentiality agreement consistent with the
provisions hereof shall be satisfactory to the Company)) or (iv) if the prior
written consent of the Board shall have been obtained. Nothing contained
herein shall prevent the use (subject, to the extent possible, to a protective
order) of Confidential Information in connection with the assertion or defense
of any claim by or against the Company or any Shareholder. Notwithstanding
the foregoing, each Shareholder or Affiliate of a Shareholder who engages
principally in the business of effecting or recommending transactions, either
as a principal or as agent on behalf of third parties, in, relating to or
involving securities (including public securities of the Company or its
subsidiaries) and including, without limitation, transactions in which such
Shareholder or Affiliate may act as an investment advisor, an investment
company, a broker or dealer in securities, an underwriter or placement agent
of securities, a market maker, a specialist, an arbitrageur, a block
positioner or a provider of securities research, may engage in such activities
with respect to securities of the Company so long as, prior to engaging in any
such activities (i) such Shareholder has established an effective "ethical
wall" between individuals receiving Confidential Information and those
individuals (including Affiliates) involved in effectuating trades or other
transactions involving such securities of the Company or its subsidiaries,
which "ethical wall" is designed to prevent any transfer, directly or
indirectly, of Confidential Information and (ii) such purchases, sales,
dealings or other transactions are made only in accordance with such "ethical
wall" policies and procedures in accordance with applicable law, rule or
regulation.
(b) "Confidential Information" means any information
concerning the Company and Persons which are or become its subsidiaries or the
financial condition, business, operations or prospects of the Company and
Persons which are or become its subsidiaries in the possession of or furnished
to any Shareholder (including, without limitation by virtue of its present or
former right to designate a director of the Company); provided that the term
"Confidential Information" does not include information which (i) is or
becomes generally available to the public other than as a result of a
disclosure by a Shareholder or its partners, directors, officers, employees,
agents, counsel, investment advisers or representatives (all such persons
being collectively referred to as "Representatives") in violation of the
Merger Agreement or this Agreement, (ii) is or was available to such
Shareholder on a nonconfidential basis prior to its disclosure to such
Shareholder or its Representatives by the Company or (iii) was or becomes
available to such Shareholder on a non-confidential basis from a source other
than the Company, provided that such source is or was (at the time of receipt
of the relevant information) not, to the best of such Shareholder's knowledge,
bound by a confidentiality agreement with (or other confidentiality obligation
to) the Company or another Person.
Section 6.2 Reports. The Company will furnish all the
Equity Investors with the quarterly and annual financial reports that the
Company is required to file with the Securities and Exchange Commission
pursuant to Section 13 or Section 15(d) of the Exchange Act promptly after the
filing thereof or, in the event the Company is not required to file such
reports, quarterly and annual reports containing the same information as would
be required in such reports on the date that such reports would otherwise be
filed.
Section 6.3 Limitations on Subsequent Registration. The
Company shall not enter into any agreement with any holder or prospective
holder of any securities of the Company (a) which conflicts with the provision
of Article V, (b) that would allow such holder or prospective holder to
include such securities in any registration filed pursuant to Section 5.1 or
5.2 hereof, unless under the terms of such agreement, such holder or
prospective holder may include such securities in any such registration only
to the extent that the inclusion of such securities would not reduce the
amount of the Registrable Securities of the Shareholders included therein or
(c) on terms otherwise more favorable than this Agreement.
Section 6.4 Limitation on Purchase of Equity Securities.
Until the earlier to occur of (i) the seventh anniversary of the Closing Date
or (ii) the date on which at least 40% of the outstanding Common Stock on a
Fully Diluted basis of the Company is held by Persons other than the
Shareholders (the "Trigger Date"), no Non-THL Shareholder shall acquire any
Equity Securities except if (A) with respect to each Institutional
Shareholder, such Shareholder may acquire Equity Securities in a purchase of
Equity Securities pursuant to Section 4.3 or 4.4 hereof, (B) with respect to
each Management Shareholder, such Shareholder may acquire Equity Securities
either in a purchase of Equity Securities pursuant to Section 4.3 or 4.4
hereof or in any other transaction so long as THL has been notified at least
five Business Days in advance and if given a reasonable opportunity to consult
with such Shareholder prior to the purchase or (C) in a Transfer from any
other Non-THL Shareholder which is otherwise permitted under the terms of
Article 3 hereof.
Section 6.5 Regulated Stockholders.
(a) If a Regulated Stockholder determines that it has a
Regulatory Problem, the Company agrees to take all such actions, subject to
Applicable Law, as are reasonably requested by such Regulated Stockholder (i)
to effectuate and facilitate any transfer by such Regulated Stockholder of any
Equity Securities of the Company then held by such Regulated Stockholder to
any Person designated by such Regulated Stockholder, (ii) to permit such
Regulated Stockholder (or any Affiliate of such Regulated Stockholder) to
exchange all or any portion of the voting Equity Securities then held by such
Person on a share-for-share basis for shares of a class of non-voting Equity
Securities of the Company, which non-voting Equity Securities, except that
such new Equity Securities shall be non-voting and shall be convertible into
voting Equity Securities on such terms as are requested by such Regulated
Stockholder in light of regulatory considerations then prevailing, and (iii)
to continue and preserve the respective allocation of the voting interests
with respect to the Company provided for in this Agreement and with respect to
such Regulated Stockholder's ownership of the Company's voting Equity
Securities. Such actions may include, without limitation, (x) entering into
such additional agreements as are reasonably requested by such Regulated
Stockholder to permit any Person(s) designated by such Regulated Stockholder
to exercise any voting power which is relinquished by such Regulated
Stockholder upon any exchange of voting Equity Securities for non-voting
Equity Securities of the Company, and (y) entering into such additional
agreements, adopting such amendments to the charter documents of the Company
and taking such additional actions as are reasonably requested by such
Regulated Stockholder in order to effectuate the intent of the foregoing.
(b) If a Regulated Stockholder has the right or opportunity
to acquire any of the Company's Equity Securities from the Company, any
Stockholder or any other Person (as the result of a preemptive offer, pro rata
offer or otherwise), at such Regulated Stockholder's request, the Company will
offer to sell (or if the Company is not the seller, to cooperate with the
seller and such Regulated Stockholder to permit such seller to sell) such
non-voting Equity Securities on the same terms as would have existed had such
Regulated Stockholder acquired the Equity Securities so offered and immediately
requested their exchange for non-voting Equity Securities pursuant to clause
(a) above.
(c) The Company agrees not to amend or waive the voting or
other provisions of this Agreement or the Company's charter documents if such
amendment or waiver would cause any Regulated Stockholder to have a Regulatory
Problem; provided that any such Regulated Stockholder notifies the Company
that it would have a Regulatory Problem promptly after it has notice of such
amendment or waiver.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Entire Agreement. This Agreement, the Merger
Agreement, the Subscription Agreement and the Equity Warrant Acquisition
Agreement constitute the entire agreement among the parties with respect to the
subject matter hereof and thereof and supersede all prior and contemporaneous
agreements and understandings, both oral and written, between the parties with
respect to the subject matter hereof and thereof.
Section 7.2 Binding Effect; Benefit. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective heirs, successors, legal representatives and permitted assigns.
Nothing in this Agreement, expressed or implied, is intended to confer on any
Person other than the parties hereto, and their respective heirs, successors,
legal representatives and permitted assigns, any rights, remedies, obligations
or liabilities under or by reason of this Agreement.
Section 7.3 Assignability. (a) Neither this Agreement nor
any right, remedy, obligation or liability arising hereunder or by reason
hereof shall be assignable by the Company or any Shareholder; provided that any
Person acquiring shares of Common Stock who is required by the terms of this
Agreement to become a party hereto shall execute and deliver to the Company an
agreement to be bound by this Agreement and shall thenceforth be a
"Shareholder."
(b) Any Permitted Transferee of a Management
Shareholder who shall become a party hereto shall be deemed a "Management
Shareholder."
(c) Any Permitted Transferee of an Institutional
Shareholder who shall become a party to this Agreement shall be deemed an
"Institutional Shareholder."
Section 7.4 Amendment; Waiver; Termination. (a) No
provision of this Agreement may be waived except by an instrument in writing
executed by the party against whom the waiver is to be effective. No
provision of this Agreement may be amended or otherwise modified except by an
instrument in writing executed by the Company with approval of the Board of
Directors and holders of at least 50% of the shares of Common Stock held by the
parties to this Agreement at the time of such proposed amendment or
modification. Notwithstanding the foregoing or any other provision of this
Agreement, THL may at any time, including after completion of a Qualifying
Public Offering, and without any other action by any other party, effectuate
an amendment to this Agreement to delete in its entirety Section 4.3(a);
provided, however, that if THL causes such Section to be deleted, so long as
the THL Entities own at least 10% of their Initial Ownership of shares of
Common Stock, the THL Entities shall not purchase any New Securities from the
Company unless the Company offers each Non-THL Shareholder the right to
participate in the purchase of such New Securities in accordance with Section
4.3(a)(iii) as if it continued to be in effect.
(b) In addition, any amendment or modification of any
provision of this Agreement that would adversely affect THL may be effected
only with the consent of THL.
(c) In addition, any amendment or modification of any
provision of this Agreement that would adversely affect any (i) Institutional
Shareholder may be effected only with the consent of such Institutional
Shareholders holding at least 66 2/3% of the shares of Common Stock held by
such Institutional Shareholders or (ii) Management Shareholder may be effected
only with the consent of the Management Shareholders (which must include the
Primary Executives) holding at least 50% of the shares of Common Stock held by
the Management Shareholders.
(d) This Agreement shall terminate on the tenth
anniversary of the date hereof unless earlier terminated.
Section 7.5 Notices. (a) All notices and other
communications given or made pursuant hereto or pursuant to any other
agreement among the parties, unless otherwise specified, shall be in writing
and shall be deemed to have been duly given and received when sent by fax
(with confirmation in writing via first class U.S. mail) or delivered
personally or on the third Business Day after being sent by registered or
certified U.S. mail (postage prepaid, return receipt requested) to the
parties at the fax number or address set forth below or at such other
addresses as shall be furnished by the parties by like notice:
(i) if to the Company, to:
Xxxxxx Scientific International, Inc.
Xxxxxxx Xxxx
Xxxxxxx, Xxx Xxxxxxxxx 00000
Attention: Xxxx X. XxXxxxx, Esq.
Fax: (000) 000-0000
(ii) if to a Management Shareholder who holds Equity
Securities exclusively through the Rabbi Trust, to such
Shareholder's attention at the following address:
Mellon Bank
1 Mellon Bank Building
000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Fax: (000)000-0000
(iii) if to any other Management Shareholder, to such
Shareholder's attention at the following address:
Xxxxxx Scientific International, Inc.
Xxxxxxx Xxxx
Xxxxxxx, Xxx Xxxxxxxxx 00000
Fax: (000) 000-0000
(iv) if to a THL Associate, to such Shareholder's attention
at the following address:
Xxxxxx X. Xxx Company
00 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxxxxxxx 00000
Fax: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
(v) if to any other Shareholder, to such Shareholder at the
address specified by such Shareholder on the signature pages
of this Agreement.
Any Shareholder may change its notice address by providing
notice to the Company with a copy, in the case of the Non-THL Shareholders, to
Xxxxxx X. Xxx Company
00 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. XxXxxx
Fax: (000) 000-0000
Any Person who becomes a Shareholder shall provide its
address and fax number to the Company, which shall promptly provide such
information to each Non-THL Shareholder.
(b) Notices required to be given pursuant to Sections
5.1(a) and 5.1(b) and Section 5.2 by the Company shall be deemed given only if
such notices are also be given telephonically and by fax to the following
persons (or any other individual the respective entities may designate in
writing to the Company to replace such person):
(i) for the benefit of the THL Entities, to Xxxxxxx
X. XxXxxx (tel: 000-000-0000; fax: 000-000-0000), with a copy to
Xxxx X. Xxxxxxx (tel: 000-000-0000; fax: 000-000-0000);
(ii) for the benefit of the Management Shareholders,
to Xxxx XxXxxxx (tel: 000-000-0000; fax: 000-000-0000), with a
copy to Xxxx Xxxxx (tel: 000-000-0000; fax: 000-000-0000);
(iii) for the benefit of the DLJ Entities, to
Xxxxxxxx Xxxx (tel: 000-000-0000; fax: 000-000-0000) and Xxxx
Xxxxxxx (tel: 000-000-0000; fax: 000-000-0000), with a copy to
Xxxxxx X. Xxxxx, Xx. (tel: 000-000-0000; fax: 000-000-0000);
(iv) for the benefit of Chase Equity, to Xxxxx
Xxxxxxxx (tel: 000-000-0000; fax: 000-000-0000), with a copy to
Xxxx X. Xxxxxx (tel: 000-000-0000; fax 000-000-0000);
(v) for the benefit of the Xxxxxxx Xxxxx Entities, to
Xxxxxx Xxxxx (tel: 000-000-0000; fax: 000-000-0000) and Xxxxxxxx
Xxxxxx (tel: 000-000-0000; fax: 000-000-0000), with a copy to
Xxxxxxx Xxxxxxxxx (tel: 000-000-0000; fax: 000-000-0000).
Section 7.6 Headings. The headings contained in this
Agreement are for convenience only and shall not affect the meaning or
interpretation of this Agreement.
Section 7.7 Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be deemed to be an original
and all of which together shall be deemed to be one and the same instrument.
Section 7.8 Applicable Law. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of
Delaware, without regard to the conflicts of laws rules of such state.
Section 7.9 Specific Performance. Each party hereto
acknowledges that the remedies at law of the other parties for a breach or
threatened breach of this Agreement would be inadequate and, in recognition of
this fact, any party to this Agreement, without posting any bond, and in
addition to all other remedies which may be available, shall be entitled to
obtain equitable relief in the form of specific performance, a temporary
restraining order, a temporary or permanent injunction or any other equitable
remedy which may then be available.
Section 7.10 Consent to Jurisdiction; Expenses. (a) Any
suit, action or proceeding seeking to enforce any provision of, or based on
any matter arising out of or in connection with, this Agreement or the
transactions contemplated hereby shall be brought in any Federal Court sitting
in the State of Delaware or any Delaware State court sitting in Delaware, and
each of the parties hereby consents to the exclusive jurisdiction of such
courts (and of the appropriate appellate courts therefrom) in any such suit,
action or proceeding and irrevocably waives, to the fullest extent permitted by
law, any objection which it may now or hereafter have to the laying of the
venue of any such suit, action or proceeding in any such court or that any
such suit, action or proceeding which is brought in any such court has been
brought in an inconvenient forum. Process in any such suit, action or
proceeding may be served on any party anywhere in the world, whether within or
without the jurisdiction of any such court. Without limiting the foregoing,
each party agrees that service of process on such party by any method provided
in Section 7.5 shall be deemed effective service of process on such party and
consents to the personal jurisdiction of any Federal Court sitting in the
State of Delaware, or any Delaware State court sitting in Delaware.
(b) In any dispute arising under this Agreement among any
of the parties hereto, the costs and expenses (including, without limitation,
the reasonable fees and expenses of counsel) incurred by the prevailing party
shall be paid by the party that does not prevail.
Section 7.11 Representative.
(a) Each THL Entities hereby designates and appoints
(and each Permitted Transferee of each such THL Entities is hereby deemed to
have so designated and appointed) each of Xxxxxxx X. XxXxxx, Xxxxx Xxxxxxxx and
Xxxx Xxxxxx, as his attorney-in-fact with full power of substitution for each
of them (the "THL Entities' Representative"), to serve as the representative
of each such person to perform all such acts as are required, authorized or
contemplated by this Agreement to be performed by such person and hereby
acknowledges that the THL Entities' Representative shall be the only person
authorized to take any action so required, authorized or contemplated by this
Agreement by each such person. Each such person further acknowledges that the
foregoing appointment and designation shall be deemed to be coupled with an
interest and shall survive the death or incapacity of such person. Each such
person hereby authorizes (and each such Permitted Transferee shall be deemed to
have authorized) the other parties hereto to disregard any notice or other
action taken by such person pursuant to this Agreement except for the THL
Entities' Representative. The other parties hereto are and will be entitled
to rely on any action so taken or any notice given by the THL Entities'
Representative and are and will be entitled and authorized to give notices
only to the THL Entities' Representative for any notice contemplated by this
Agreement to be given to any such person. A successor to the THL Entities'
Representative may be chosen by a majority in interest of the THL Entities'
Shareholders, provided that notice thereof is given by the new THL Entities'
Representative to the Company and to each Non-THL Shareholder.
(b) Each DLJ Entities hereby designates and appoints
(and each Permitted Transferee of each such DLJ Entities' is hereby deemed to
have so designated and appointed) DLJ Merchant Banking II, Inc., as his
attorney-in-fact with full power of substitution for each of them (the "DLJ
Entities' Representative"), to serve as the representative of each such person
to perform all such acts (other than voting of shares of Common Stock) as are
required, authorized or contemplated by this Agreement to be performed by such
person and hereby acknowledges that the DLJ Entities' Representative shall be
the only person authorized to take any action so required, authorized or
contemplated by this Agreement by each such person. Each such person hereby
authorizes (and each such Permitted Transferee shall be deemed to have
authorized) the other parties hereto to disregard any notice or other action
taken by such person pursuant to this Agreement except for the DLJ Entities'
Representative. The other parties hereto are and will be entitled to rely on
any action so taken or any notice given by the DLJ Entities' Representative
and are and will be entitled and authorized to give notices only to the DLJ
Entities' Representative for any notice contemplated by this Agreement to be
given to any such person. A successor to the DLJ Entities' Representative may
be chosen by a majority in interest of the DLJ Entities' Shareholders,
provided that notice thereof is given by the new DLJ Entities' Representative
to the Company and to each other DLJ Entity Shareholder.
(c) Each Xxxxxxx Xxxxx Entities hereby designates and
appoints (and each Permitted Transferee of each such Xxxxxxx Xxxxx Entities is
hereby deemed to have so designated and appointed) KECALP Inc., as his
attorney-in-fact with full power of substitution for each of them (the
"Xxxxxxx Xxxxx Entities Representative"), to serve as the representative of
each such person to perform all such acts as are required, authorized or
contemplated by this Agreement to be performed by such person and hereby
acknowledges that the Xxxxxxx Xxxxx Entities Representative shall be the only
person authorized to take any action so required, authorized or contemplated
by this Agreement by each such person. Each such person further acknowledges
that the foregoing appointment and designation shall be deemed to be coupled
with an interest and shall survive the death or incapacity of such person.
Each such person hereby authorizes (and each such Permitted Transferee shall
be deemed to have authorized) the other parties hereby to disregard any notice
or other action taken by such person pursuant to this Agreement except for the
Xxxxxxx Xxxxx Entities Representative. The other parties hereto are and will
be entitled to rely on any action so taken or any notice given by the Xxxxxxx
Xxxxx Entities Representative and are and will be entitled and authorized to
give notices only to the Xxxxxxx Xxxxx Entities Representative for any notice
contemplated by this Agreement to be given to any such person. A successor to
the Xxxxxxx Xxxxx Entities Representative may be chosen by a majority in
interest of the Xxxxxxx Xxxxx Entities' Shareholders, provided that notice
thereof is given by the new Xxxxxxx Xxxxx Entities Representative to the
Company and to each other Xxxxxxx Xxxxx Entity Shareholder.
(d) Each Management Shareholder hereby designates and
appoints (and each Permitted Transferee of each such Management Shareholder is
hereby deemed to have so designated and appointed) Xxxx X. Xxxxxxx, as his
attorney-in-fact with full power of substitution for each of them (the
"Management Representative"), to serve as the representative of each such
person to perform all such acts as are required, authorized or contemplated by
this Agreement to be performed by such person and hereby acknowledges that the
Management Representative shall be the only person authorized to take any
action so required, authorized or contemplated by this Agreement by each such
person. Each such person further acknowledges that the foregoing appointment
and designation shall be deemed to be coupled with an interest and shall
survive the death or incapacity of such person. Each such person hereby
authorizes (and each such Permitted Transferee shall be deemed to have
authorized) the other parties hereby to disregard any notice or other action
taken by such person pursuant to this Agreement except for the Management
Representative. The other parties hereto are and will be entitled to rely on
any action so taken or any notice given by the Management Representative and
are and will be entitled and authorized to give notices only to the Management
Representative for any notice contemplated by this Agreement to be given to
any such person. A successor to the Management Representative may be chosen
by a majority in interest of the Management Shareholders, provided that notice
thereof is given by the new Management Representative to the Company and to
each other Management Shareholder.
Section 7.12 Severability. If one or more provisions of
this Agreement are held to be unenforceable to any extent under applicable
law, such provision shall be interpreted as if it were written so as to be
enforceable to the maximum possible extent so as to effectuate the parties'
intent to the maximum possible extent, and the balance of the Agreement shall
be interpreted as if such provision were so excluded and shall be enforceable
in accordance with its terms to the maximum extent permitted by law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
XXXXXX SCIENTIFIC INTERNATIONAL, INC.
By: /s/ Xxxx X. XxXxxxx
----------------------------------
Name: Xxxx X. XxXxxxx
Title: Vice President -
General Counsel and
Secretary
THL Equity Shareholders:
XXXXXX X. XXX EQUITY FUND III, L.P.
By: THL Equity Advisors III Limited
Partnership, as General Partner
By: THL Equity Trust III,
as General Partner
By: /s/ Xxxxxxx X. XxXxxx
----------------------------------
Name: Xxxxxxx X. XxXxxx
Title:
XXXXXX X. XXX FOREIGN FUND III, L.P.
By: THL Equity Advisors III Limited
Partnership, as General Partner
By: THL Equity Trust III,
as General Partner
By: /s/ Xxxxxxx X. XxXxxx
----------------------------------
Name: Xxxxxxx X. XxXxxx
Title:
THL FSI EQUITY INVESTORS, L.P.
By: THL Equity Advisors III Limited
Partnership, as General Partner
By: THL Equity Trust III,
as General Partner
By: /s/ Xxxxxxx X. XxXxxx
----------------------------------
Name: Xxxxxxx X. XxXxxx
Title:
THL-CCI LIMITED PARTNERSHIP
By: THL Investment Management Corp.
as General Partner
By: /s/ Xxxxxxx X. XxXxxx
----------------------------------
Name: Xxxxxxx X. XxXxxx
Title:
Management Shareholders:
By: /s/ Xxxx X. Xxxxxxxx
----------------------------------
Name: Xxxx X. Xxxxxxxx
By: /s/ Xxxx X. Xxxxxxx
----------------------------------
Name: Xxxx X. Xxxxxxx
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title:
By: /s/ Xxxxxx Xxxxxxx
----------------------------------
Name: Xxxxxx Xxxxxxx
By: /s/ Xxxxx X. Xxxxx
----------------------------------
Name: Xxxxx X. Xxxxx
By: /s/ Xxxx X. Xxxxx
----------------------------------
Name: Xxxx X. Xxxxx
By: /s/ Xxxx X. XxXxxxx
----------------------------------
Name: Xxxx X. XxXxxxx
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxx
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxxxx
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxx
By: /s/ A. Xxxxxxxxx Xxxx
----------------------------------
Name: A. Xxxxxxxxx Xxxx
By: /s/ Xxxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxx
DLJ Entities' Shareholders:
DLJ MERCHANT BANKING PARTNERS II, L.P.
By: DLJ Merchant Banking II, Inc.,
as managing general partner
By: /s/ Xxxxxxxx Xxxx
----------------------------------
Name: Xxxxxxxx Xxxx
Title:
DLJ MERCHANT BANKING PARTNERS II-A, L.P.
By: DLJ Merchant Banking II, Inc.,
as managing general partner
By: /s/ Xxxxxxxx Xxxx
----------------------------------
Name: Xxxxxxxx Xxxx
Title:
DLJ OFFSHORE PARTNERS II, C.V.
By: DLJ Merchant Banking II, Inc.,
as advisory general partner
By: /s/ Xxxxxxxx Xxxx
----------------------------------
Name: Xxxxxxxx Xxxx
Title:
DLJ DIVERSIFIED PARTNERS, L.P.
By: DLJ Diversified Partners, Inc.,
as managing general partner
By: /s/ Xxxxxxxx Xxxx
----------------------------------
Name: Xxxxxxxx Xxxx
Title:
DLJ DIVERSIFIED PARTNERS - A, L.P.
By: DLJ Diversified Partners, Inc.,
as managing general partner
By: /s/ Xxxxxxxx Xxxx
----------------------------------
Name: Xxxxxxxx Xxxx
Title:
DLJ MILLENNIUM PARTNERS, L.P.
By: DLJ Merchant Banking II, Inc.,
as managing general partner
By: /s/ Xxxxxxxx Xxxx
----------------------------------
Name: Xxxxxxxx Xxxx
Title:
DLJ MILLENNIUM PARTNERS - A, L.P.
By: DLJ Merchant Banking II, Inc.,
as managing general partner
By: /s/ Xxxxxxxx Xxxx
----------------------------------
Name: Xxxxxxxx Xxxx
Title:
DLJMB FUNDING II, INC.
By: /s/ Xxxxxxxx Xxxx
----------------------------------
Name: Xxxxxxxx Xxxx
Title:
UK INVESTMENT PLAN 1997 PARTNERS
By: Xxxxxxxxx, Lufkin & Xxxxxxxx Inc.,
as general partner
By: /s/ Xxxxxxxx Xxxx
----------------------------------
Name: Xxxxxxxx Xxxx
Title:
DLJ EAB PARTNERS, L.P.
By: DLJ LBO Plans Management Corporation,
as managing general partner
By: /s/ Xxxxxxxx Xxxx
----------------------------------
Name: Xxxxxxxx Xxxx
Title:
DLJ ESC II, L.P.
By: DLJ LBO Plans Management Corporation,
as general partner
By: /s/ Xxxxxxxx Xxxx
----------------------------------
Name: Xxxxxxxx Xxxx
Title:
DLJ FIRST ESC, L.P.
By: DLJ LBO Plans Management Corporation,
as general partner
By: /s/ Xxxxxxxx Xxxx
----------------------------------
Name: Xxxxxxxx Xxxx
Title:
The address for each of the DLJ Entities
listed above is:
c/o DLJ Merchant Banking II, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
CHASE EQUITY ASSOCIATES, L.P.
By: Chase Capital Partners
By: /s/ Xxxxxxx Xxxxx
----------------------------------
Name: Xxxxxxx Xxxxx
Title: Executive Partner
Address:
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxxxx Xxxxx Entities:
ML IBK POSITIONS, INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
KECALP INC.
By: /s/ Xxxxxx Xxxxx
----------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President and
Treasurer
XXXXXXX XXXXX KECALP L.P. 1997
By: KECALP Inc., as general partner
By: /s/ Xxxxxx Xxxxx
----------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President and
Treasurer
The address for each of the Xxxxxxx Xxxxx
Entities
listed above is:
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Individual Shareholders:
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxxx
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------
Name: The 1995 Harkins Gift Trust
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxxx
Money Purchase Pension Plan
By: /s/ Xxxxx X. Xxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxx
By: /s/ X. Xxxxxx Xxxx
----------------------------------
Name: X. Xxxxxx Xxxx
By: /s/ Xxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxxxx
By: /s/ Xxxxxxxx Family Limited
Partnership
----------------------------------
Name: Xxxxxxxx Family Limited
Partnership
By: /s/ Xxxxxxx X. XxXxxx
----------------------------------
Name: Xxxxxxx X. XxXxxx
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxx
By: /s/ Xxxxxx X. Xxxxx, Xx.
----------------------------------
Name: Xxxxxx X. Xxxxx,Xx.
By: /s/ Xxxx X. Xxxxx
----------------------------------
Name: Xxxx X. Xxxxx
By: /s/ Xxxxxx X. Xxxxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxxxx
By: /s/ Xxxx X. Xxxxxx
----------------------------------
Name: Xxxx X. Xxxxxx
By: /s/ Xxxxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxxxx X. Xxxxxx
By: /s/ Xxxx X. Xxxxxxxx
----------------------------------
Name: Xxxx X. Xxxxxxxx
By: /s/ Xxxxx X. Xxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxx
By: /s/ THL-CCI Limited Partnership
----------------------------------
Name: THL-CCI Limited Partnership
By: Xxxxx X. Master
Title: Vice President
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxx
By: /s/ Xxxxxxxx X. Xxxxx
----------------------------------
Name: First Trust Co. FBO
Xxxxxxxx X. Xxxxx
By: /s/ Xxxxxxx Xxxxxx
----------------------------------
Name: Xxxxxxx Xxxxxx
By: /s/ Xxxxx Xxxxxx
----------------------------------
Name: Xxxxx Xxxxxx
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Schedule I
Certain Named Individual Shareholders of THL
--------------------------------------------
Xxxxx X. Xxxxxxx
The 1995 Harkins Gift Trust
Xxxxxx X. Xxxxxxxx Money Purchase Pension Plan (Xxxxx)
Xxxxx X. Xxxxxx
X. Xxxxxx Xxxx
Xxxxx X. Xxxxxxxx
Xxxxxxxx Family Limited Partnership
Xxxxxxx X. XxXxxx
Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxx, Xx.
Xxxx X. Xxxxx
Xxxxxx X. Xxxxxxxxx
Xxxx X. Xxxxxx
Xxxxxxxx X. Xxxxxx
Xxxx X. Xxxxxxxx
Xxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxx
First Trust Co. FBO Xxxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxxx
Xxxxx Xxxxxx
Xxxxxxx X. Xxxxxxx
Schedule II
THL Individuals
---------------
Xxxxxx X. Xxx
Xxxxxxx X. Xxx
Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxxx
Xxxxx Xxxxxxxxx
Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxx
Xxxxxx & Co. for Xxxxxx Xxxxxx Xxx 1988 Irrevocable Trust
Xxxxxx & Co. for Xxxxxxx Xxxxxxx Xxx 1988 Irrevocable Trust
THL Investment Management Corp.
Schedule III
Initial Classified Board of Directors
-------------------------------------
Class I Class II Class III
Term Expiring 1998 Term Expiring 1999 Term Expiring 2000
------------------ ------------------ ------------------
Xxxxxx Xxx Xxxxxxxx Xxxxx [DLJ Nominee]
Xxxxxxx Xxxxxxx Xxxxx Xxxxxxx Xxxxxxx X. XxXxxx
Xxxx Xxxxxx Xxxx Xxxxxxx Xxxx Xxxxxxxx
